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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Axon Enterprise Inc | NASDAQ:AXON | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.80 | 0.57% | 318.55 | 310.80 | 329.00 | 321.00 | 316.64 | 319.24 | 279,176 | 01:00:00 |
SCOTTSDALE, Ariz., Feb. 24, 2022 /PRNewswire/ --
Dear Shareholders,
Our 2021 results reflect strong operational and financial execution across the business.
We are executing upon our vision to build the world's largest and most trusted network of safety devices, in service of protecting life by:
In 2021, we achieved revenue growth of 27% to $863 million. Over the past three years, we have delivered a 27% compound annual revenue growth rate. While our net loss of $60 million includes the impact of non-cash stock based compensation expenses, annual Adjusted EBITDA of $178 million exceeded our guidance, reflected a 20.6% margin and showcases our ability to deliver profitability while investing heavily to scale. Indeed, we have achieved a three year Adjusted EBITDA CAGR of 43%.
Our focus on building best-in-class subscription software, with a positive user experience, has driven our annual recurring revenue to $327 million, tripling over three years.
And record annual bookings of $1.7 billion, up 54% over 2020, point to strong growth ahead.
This level of sustainable high growth and profitability underscores the importance and relevance of our mission to protect life. This is especially true at a time when pandemics and social unrest have created far-reaching impacts personally, professionally and societally, around the world.
The stories that we hear from customers and citizens about lives saved and communities feeling supported embolden us to continue innovating, to pursue new markets and expand Axon's footprint into new geographies, executing against the $52 billion total addressable market opportunity we laid out in November 2021.
Our long-term model and financial targets remain unchanged: We aim to deliver a 20%+ top line CAGR, while building recurring revenue streams that support underlying Adjusted EBITDA margins of 30%, allowing us to reinvest for growth, as a Rule of 40 grower(1).
Our priority in 2022 is to *further excel at what we do* and we are focused on setting our teams up for success. We are scaling new products and markets, and attracting and developing talent to continue executing on our mission.
(1) | The way Axon invests in future growth while also demonstrating leverage is to target the Rule of 40 — where the sum of our top line growth percentage plus our Adjusted EBITDA margin percentage equals or surpasses 40. This metric is typically used to evaluate pure SaaS companies, and has set a high bar for our entire business, which includes hardware. It's a bar that we continuously beat. |
Select updates
New products
Axon launched Attorney Premier in December, formally entering the justice software market, which we estimate to be worth $1 billion. Attorney Premier enables prosecutors and defense attorneys to easily manage various forms of digital evidence, including body-worn and in-car video, drone footage, interview room video, CCTV video, photographs, audio, documents and more.
Axon's R&D on the category began more than a year ago, and included hundreds of interviews with prosecutors and defense attorneys. The proliferation of digital evidence has forced highly-trained attorneys to spend up to a third of their time on clerical work. Often, public defenders have as little as six minutes with a client before entering a plea deal, while prosecutors have less than an hour to make a charging decision. Both sides can have hours of video evidence to review for each case.
"Our District Attorney's Office has been working with Axon to meet the many challenges that face us with the volume of videos and other digital discovery that now fills the files of each case. We have found Axon's approach to be responsive and found Attorney Premier to be refreshing and innovative."
— Dan Rubinstein, District Attorney at 21st Judicial District Attorney's Office in Colorado
Axon introduced plans for the Bolt 2, a new consumer device. The TASER Bolt 2 is Axon's upcoming self-defense product. It will feature a 15-foot range, discreet design, enhanced features for improved accuracy in low-light, and the ability to alert emergency dispatch when discharged when paired with a companion app.
The Bolt 2 is designed to immobilize attackers for up to 30 seconds.
We anticipate that consumer will be a growing area of investment for us over the long term given our incredibly low penetration of this sizeable market. Our investments in personal safety devices fall alongside our other growth investments, including software. All of these investments are subject to the same financial discipline that allows us to deliver meaningful profitability while also growing the top line at 20% or higher.
Global scaling
Our geographical footprint continues to expand. Axon's investments in CapEx include building out facilities around the world to better service our customers.
In late 2021, we opened a new fulfillment center in Georgia, which aims to reduce shipping times to Europe by about 50% and allows us to reach many domestic customers more quickly, which is critical in peak season and in mitigation for poor weather. The Atlanta fulfillment center is one of five. Others include the facilities in or near Phoenix, the UK, Germany and Australia.
In February 2022, we announced a new European R&D office. The London R&D hub is Axon's fourth after Scottsdale, Ariz., Seattle, and Vietnam's Ho Chi Minh City.
Strategic initiatives
Two initiatives completed in Q4 2021 are highly strategic and value added.
Axon acquired Occam Video Solutions, a well-established provider of forensic video solutions software. Axon initially partnered with Occam in 2020 to license its technology. The purchase price was $26 million, consisting of cash and stock.
The Axon Evidence integration with Occam's solution solves a key pain point for our customers. Video security, closed-circuit TV (CCTV) and publicly submitted video evidence can be burdensome for law enforcement agencies to manage. Many video security systems use unique video formats that can only be played back using third-party hardware or software. When agencies attempt to playback that video using other commercial software, the files often play incorrectly with frames being skipped entirely. Occam's software solves this issue and supports most video file types.
Strategic investment in Dedrone, leader in drone detection and tracking: Axon invested $25 million in Dedrone, a leader in drone security solutions to identify, track and mitigate Small Unmanned Aircraft Systems (sUAS). Dedrone has been delivering strong growth, and has surpassed 1,000 sensors sold, expanding to detect more than 200 drone types. Dedrone uses artificial intelligence and machine learning (AI/ML) to analyze and synthesize data from sensors to detect, identify and track drones. Its software also provides data analytics and drone mitigation.
Axon's investment in Dedrone is strategically significant to Axon's long-term plans to leverage drones for public safety. Dedrone is selling into 33 countries, and customers include four G-7 nations, nine U.S. federal agencies, including the Department of Defense, and more than 65 critical infrastructure sites, 20 airports, 50 correctional facilities and 10 Fortune 500 companies. Dedrone's product suite will integrate with Axon's end-to-end drone solution, Axon Air, which we launched in 2018.
Summary of Q4 2021 results:
(2) | 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 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | QoQ | YoY | ||||||||||||||
(in thousands) | ||||||||||||||||||
Net sales | $ | 103,909 | $ | 121,491 | $ | 135,761 | (14.5) | % | (23.5) | % | ||||||||
Gross margin | 63.9 | % | 65.8 | % | 64.5 | % | (190) | bp | (60) | bp |
Software & Sensors
THREE MONTHS ENDED | CHANGE | |||||||||||||||||
31 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | QoQ | YoY | ||||||||||||||
(in thousands) | ||||||||||||||||||
Axon Cloud net sales | $ | 68,668 | $ | 63,264 | $ | 50,343 | 8.5 | % | 36.4 | % | ||||||||
Axon Cloud gross margin | 74.3 | % | 74.6 | % | 77.7 | % | (30) | bp | (340) | bp | ||||||||
Sensors and Other net sales | $ | 45,001 | $ | 47,234 | $ | 40,036 | (4.7) | % | 12.4 | % | ||||||||
Sensors and Other gross margin | 39.3 | % | 36.9 | % | 36.3 | % | 240 | bp | 300 | bp |
Forward-looking performance indicators:
31 DEC 2021 | 30 SEP 2021 | 30 JUN 2021 | 31 MAR 2021 | 31 DEC 2020 | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Annual recurring revenue (1) | $ | 327,488 | $ | 288,691 | $ | 260,178 | $ | 242,357 | $ | 221,263 | ||||||||||
Net revenue retention (2) | 119 | % | 119 | % | 119 | % | 119 | % | 119 | % | ||||||||||
Total company future | $ | 2,800,000 | $ | 2,390,000 | $ | 2,040,000 | $ | 1,790,000 | $ | 1,730,000 | ||||||||||
Percentage of TASER | 65 | % | 58 | % | 55 | % | 64 | % | 53 | % |
(1) | Monthly recurring license, integration, warranty, and storage revenue annualized. |
(2) | Refer to "Statistical Definitions" below. |
Outlook
The following forward-looking statements reflect Axon's full year 2022 expectations as of February 24, 2022, and are subject to risks and uncertainties.
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,
Rick Smith, CEO
Luke Larson, President
Jawad Ahsan, CFO
Quarterly conference call and webcast
We will host our Q4 2021 earnings conference call webinar on Thursday, February 24, 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/91034907333.
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 December 31, 2021. 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.
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:
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 262,000 lives and countless dollars have been saved with the Axon Network of devices, apps and people. Learn more at www.axon.com or by calling (800) 978-2737. Axon is a global company with headquarters in Scottsdale, Arizona, and a global software engineering hub in Seattle, Washington, as well as additional offices in the US, Australia, Canada, Finland, Vietnam, the UK and the Netherlands.
Cellebrite is a trademark of Cellebrite Mobile Synchronization Ltd.; Dedrone is a trademark of Dedrone Holdings, Inc., Facebook is a trademark of Facebook, Inc.; RapidSOS is a trademark of RapidSOS Inc.; Twitter is a trademark of Twitter, Inc.; Vievu is a trademark of Vievu, LLC and Zoom is a trademark of Zoom Video Communications, Inc. Axon, Axon Network, Bolt 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:
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. Our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q list various important factors that could cause actual results to differ materially from expected and historical results. These factors are intended as cautionary statements for investors within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act. Readers can find them under the heading "Risk Factors" in the Annual Report on Form 10-K and in the Quarterly Reports on Form 10-Q, and investors should refer to them. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports to the SEC.
Update on Legal Matters:
Axon v. FTC
Axon continues to vigorously prosecute its federal court constitutional case against the Federal Trade Commission (FTC) while the FTC's separate antitrust administrative action against the company 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.
As background, Axon's federal district court constitutional challenge against the FTC was dismissed in April 2020, without prejudice, for lack of jurisdiction, holding that Axon must first bring its claims through the FTC's administrative process. Axon appealed that ruling to the Ninth Circuit (No. 20-15662). In January 2021, the appellate panel in a 2-1 split decision affirmed the district court ruling against Axon on the jurisdictional question, but granted Axon's motion to stay the case pending resolution of the company's certiorari petition with the U.S. Supreme Court (No. 21-86).
The Supreme Court will now decide the question of "whether Congress impliedly stripped federal district courts of jurisdiction over constitutional challenges to the FTC's structure, procedures, and existence by granting the courts of appeals jurisdiction to 'affirm, enforce, modify, or set aside' the Commission's cease-and-desist orders." Without such jurisdiction, parties must endure the very processes they contend are unconstitutional before reaching a court with actual authority to decide their claims.
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.
As a reminder, in parallel to these matters Axon is evaluating strategic alternatives to litigation, which Axon might pursue if determined to be in the best interests of shareholders and customers. This could include a divestiture of the Vievu entity and/or related assets. While Axon continues to believe the 2018 acquisition of Vievu was lawful and a benefit to Vievu's customers, the cost, risk and distraction of protracted litigation merit consideration of settlement if achievable on terms agreeable to the FTC and Axon.
For investor relations information please contact Investor Relations via email at IR@axon.com.
AXON ENTERPRISE, INC. | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited) | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||
31 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | 31 DEC 2021 | 31 DEC 2020 | |||||||||||
Net sales from products | $ | 145,409 | $ | 165,803 | $ | 174,116 | $ | 608,525 | $ | 500,250 | |||||
Net sales from services | 72,169 | 66,186 | 52,024 | 254,856 | 180,753 | ||||||||||
Net sales | 217,578 | 231,989 | 226,140 | 863,381 | 681,003 | ||||||||||
Cost of product sales | 64,845 | 71,336 | 73,624 | 260,098 | 224,131 | ||||||||||
Cost of service sales | 17,672 | 16,086 | 11,210 | 62,373 | 40,541 | ||||||||||
Cost of sales | 82,517 | 87,422 | 84,834 | 322,471 | 264,672 | ||||||||||
Gross margin | 135,061 | 144,567 | 141,306 | 540,910 | 416,331 | ||||||||||
Operating expenses: | |||||||||||||||
Sales, general and administrative | 111,453 | 99,295 | 97,523 | 515,007 | 307,286 | ||||||||||
Research and development | 50,674 | 42,382 | 38,008 | 194,026 | 123,195 | ||||||||||
Total operating expenses | 162,127 | 141,677 | 135,531 | 709,033 | 430,481 | ||||||||||
Income (loss) from operations | (27,066) | 2,890 | 5,775 | (168,123) | (14,150) | ||||||||||
Interest and other incom (expense), net | (10,148) | (5,530) | 3,265 | 26,748 | 7,859 | ||||||||||
Income (loss) before provision for income taxes | (37,214) | (2,640) | 9,040 | (141,375) | (6,291) | ||||||||||
Benefit from income taxes | (23,706) | (51,164) | (16,794) | (81,357) | (4,567) | ||||||||||
Net income (loss) | $ | (13,508) | $ | 48,524 | $ | 25,834 | $ | (60,018) | $ | (1,724) | |||||
Net income (loss) per common and common equivalent shares: | |||||||||||||||
Basic | $ | (0.19) | $ | 0.73 | $ | 0.41 | $ | (0.91) | $ | (0.03) | |||||
Diluted | $ | (0.19) | $ | 0.67 | $ | 0.40 | $ | (0.91) | $ | (0.03) | |||||
Weighted average number of common and common | |||||||||||||||
Basic | 69,310 | 66,192 | 63,639 | 66,191 | 61,782 | ||||||||||
Diluted | 69,310 | 72,441 | 65,362 | 66,191 | 61,782 |
AXON ENTERPRISE, INC. | ||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | ||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED | THREE MONTHS ENDED | THREE MONTHS ENDED | ||||||||||||||||||||||||||||||||||
31 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | ||||||||||||||||||||||||||||||||||
Software | Software | Software | ||||||||||||||||||||||||||||||||||
and | and | and | ||||||||||||||||||||||||||||||||||
TASER | Sensors | Total | TASER | Sensors | Total | TASER | Sensors | Total | ||||||||||||||||||||||||||||
Net sales from products (1) | $ | 100,408 | $ | 45,001 | $ | 145,409 | $ | 118,569 | $ | 47,234 | $ | 165,803 | $ | 134,080 | $ | 40,036 | $ | 174,116 | ||||||||||||||||||
Net sales from services (2) | 3,501 | 68,668 | 72,169 | 2,922 | 63,264 | 66,186 | 1,681 | 50,343 | 52,024 | |||||||||||||||||||||||||||
Net sales | 103,909 | 113,669 | 217,578 | 121,491 | 110,498 | 231,989 | 135,761 | 90,379 | 226,140 | |||||||||||||||||||||||||||
Cost of product sales | 37,539 | 27,306 | 64,845 | 41,554 | 29,782 | 71,336 | 48,138 | 25,486 | 73,624 | |||||||||||||||||||||||||||
Cost of service sales | — | 17,672 | 17,672 | — | 16,086 | 16,086 | — | 11,210 | 11,210 | |||||||||||||||||||||||||||
Cost of sales | 37,539 | 44,978 | 82,517 | 41,554 | 45,868 | 87,422 | 48,138 | 36,696 | 84,834 | |||||||||||||||||||||||||||
Gross margin | 66,370 | 68,691 | 135,061 | 79,937 | 64,630 | 144,567 | 87,623 | 53,683 | 141,306 | |||||||||||||||||||||||||||
Gross margin % | 63.9 | % | 60.4 | % | 62.1 | % | 65.8 | % | 58.5 | % | 62.3 | % | 64.5 | % | 59.4 | % | 62.5 | % | ||||||||||||||||||
Research and development | 14,104 | 36,570 | 50,674 | 10,476 | 31,906 | 42,382 | 5,231 | 32,777 | 38,008 |
TWELVE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||||||||||||||||||
31 DEC 2021 | 31 DEC 2020 | |||||||||||||||||||||||
Software | Software | |||||||||||||||||||||||
and | and | |||||||||||||||||||||||
TASER | Sensors | Total | TASER | Sensors | Total | |||||||||||||||||||
Net sales from products (1) | $ | 426,916 | $ | 181,609 | $ | 608,525 | $ | 362,649 | $ | 137,601 | $ | 500,250 | ||||||||||||
Net sales from services (2) | 10,011 | 244,845 | 254,856 | 3,903 | 176,850 | 180,753 | ||||||||||||||||||
Net sales | 436,927 | 426,454 | 863,381 | 366,552 | 314,451 | 681,003 | ||||||||||||||||||
Cost of product sales | 149,739 | 110,359 | 260,098 | 136,925 | 87,206 | 224,131 | ||||||||||||||||||
Cost of service sales | 145 | 62,228 | 62,373 | — | 40,541 | 40,541 | ||||||||||||||||||
Cost of sales | 149,884 | 172,587 | 322,471 | 136,925 | 127,747 | 264,672 | ||||||||||||||||||
Gross margin | 287,043 | 253,867 | 540,910 | 229,627 | 186,704 | 416,331 | ||||||||||||||||||
Gross margin % | 65.7 | % | 59.5 | % | 62.7 | % | 62.6 | % | 59.4 | % | 61.1 | % | ||||||||||||
Research and development | 46,136 | 147,890 | 194,026 | 15,380 | 107,815 | 123,195 |
(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 | TWELVE MONTHS ENDED | |||||||||||||||||
31 DEC | 31 DEC | Unit | Percent | 31 DEC | 31 DEC | Unit | Percent | |||||||||||
2021 | 2020 | Change | Change | 2021 | 2020 | Change | Change | |||||||||||
TASER 7 | 12,927 | 41,099 | (28,172) | (68.5) | % | 90,348 | 77,451 | 12,897 | 16.7 | % | ||||||||
TASER X26P | 8,246 | 10,611 | (2,365) | (22.3) | 30,083 | 37,391 | (7,308) | (19.5) | ||||||||||
TASER X2 | 14,432 | 9,751 | 4,681 | 48.0 | 38,620 | 43,407 | (4,787) | (11.0) | ||||||||||
TASER Consumer devices | 8,733 | 11,657 | (2,924) | (25.1) | 26,958 | 33,158 | (6,200) | (18.7) | ||||||||||
Cartridges | 1,194,867 | 1,272,679 | (77,812) | (6.1) | 4,945,927 | 3,714,291 | 1,231,636 | 33.2 | ||||||||||
Axon Body | 31,749 | 44,735 | (12,986) | (29.0) | 181,663 | 182,538 | (875) | (0.5) | ||||||||||
Axon Flex | 1,027 | 749 | 278 | 37.1 | 7,828 | 8,962 | (1,134) | (12.7) | ||||||||||
Axon Fleet | 4,609 | 3,905 | 704 | 18.0 | 11,264 | 11,304 | (40) | (0.4) | ||||||||||
Axon Dock | 4,959 | 6,326 | (1,367) | (21.6) | 25,584 | 25,422 | 162 | 0.6 | ||||||||||
AXON ENTERPRISE, INC. | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Dollars in thousands | ||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||||||||||
31 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | 31 DEC 2021 | 31 DEC 2020 | ||||||||||||
EBITDA and Adjusted EBITDA: | ||||||||||||||||
Net income (loss) | $ | (13,508) | $ | 48,524 | $ | 25,834 | $ | (60,018) | $ | (1,724) | ||||||
Depreciation and amortization | 5,274 | 4,838 | 3,531 | 18,694 | 12,475 | |||||||||||
Interest expense | 1 | 5 | 11 | 28 | 55 | |||||||||||
Investment interest income | (353) | (123) | (929) | (1,511) | (4,086) | |||||||||||
Provision for (benefit from) income taxes | (23,706) | (51,164) | (16,794) | (81,357) | (4,567) | |||||||||||
EBITDA | $ | (32,292) | $ | 2,080 | $ | 11,653 | $ | (124,164) | $ | 2,153 | ||||||
Adjustments: | ||||||||||||||||
Stock-based compensation expense | $ | 41,110 | $ | 35,062 | $ | 53,448 | $ | 303,331 | $ | 133,572 | ||||||
Realized and unrealized (gains) losses | 11,160 | 6,660 | (2,055) | (23,035) | (2,055) | |||||||||||
Transaction costs related to strategic | 1,180 | 393 | 109 | 2,068 | 1,032 | |||||||||||
Loss on disposal and abandonment of | 16 | — | 68 | 146 | 320 | |||||||||||
Loss on disposal and impairment of | 18 | 31 | 293 | 92 | 1,722 | |||||||||||
Costs related to FTC litigation | 119 | 242 | 522 | 741 | 19,064 | |||||||||||
Payroll taxes related to XSPP vesting | 9,195 | 6,069 | — | 18,933 | — | |||||||||||
Adjusted EBITDA | $ | 30,506 | $ | 50,537 | $ | 64,038 | $ | 178,112 | $ | 155,808 | ||||||
Net income (loss) as a percentage of net sales | (6.2) | % | 20.9 | % | 11.4 | % | (7.0) | % | (0.3) | % | ||||||
Adjusted EBITDA as a percentage of net sales | 14.0 | % | 21.8 | % | 28.3 | % | 20.6 | % | 22.9 | % | ||||||
Stock-based compensation expense: | ||||||||||||||||
Cost of product and service sales | $ | 1,405 | $ | 1,112 | $ | 1,294 | $ | 5,844 | $ | 3,464 | ||||||
Sales, general and administrative | 27,740 | 25,969 | 43,007 | 238,813 | 103,860 | |||||||||||
Research and development | 11,965 | 7,981 | 9,147 | 58,674 | 26,248 | |||||||||||
Total | $ | 41,110 | $ | 35,062 | $ | 53,448 | $ | 303,331 | $ | 133,572 |
(1) | Includes net unrealized gains of $10.7 million and realized gain of $12.3 million for the twelve months ended December 31, 2021. |
AXON ENTERPRISE, INC. | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - continued | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Dollars in thousands, except per share amounts | ||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||||||||||
31 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | 31 DEC 2021 | 31 DEC 2020 | ||||||||||||
Non-GAAP net income: | ||||||||||||||||
GAAP net income (loss) | $ | (13,508) | $ | 48,524 | $ | 25,834 | $ | (60,018) | $ | (1,724) | ||||||
Non-GAAP adjustments: | ||||||||||||||||
Stock-based compensation expense | 41,110 | 35,062 | 53,448 | 303,331 | 133,572 | |||||||||||
Realized and unrealized (gains) losses on | 11,160 | 6,660 | (2,055) | (23,035) | (2,055) | |||||||||||
Loss on disposal and abandonment of intangible | 16 | — | 68 | 146 | 320 | |||||||||||
Loss on disposal and impairment of property and | 18 | 31 | 293 | 92 | 1,722 | |||||||||||
Transaction costs related to strategic investments | 1,180 | 393 | 109 | 2,068 | 1,032 | |||||||||||
Costs related to FTC litigation | 119 | 242 | 522 | 741 | 19,064 | |||||||||||
Payroll taxes related to XSPP vesting and CEO | 9,195 | 6,069 | — | 18,933 | — | |||||||||||
Income tax effects | (15,605) | (12,064) | (13,172) | (75,276) | (38,156) | |||||||||||
Non-GAAP net income | $ | 33,685 | $ | 84,917 | $ | 65,047 | $ | 166,982 | $ | 113,775 | ||||||
Diluted income (loss) per common share | ||||||||||||||||
GAAP | $ | (0.19) | $ | 0.67 | $ | 0.40 | $ | (0.91) | $ | (0.03) | ||||||
Non-GAAP | $ | 0.46 | $ | 1.17 | $ | 1.00 | $ | 2.35 | $ | 1.81 | ||||||
Diluted weighted average shares outstanding | ||||||||||||||||
GAAP | 69,310 | 72,441 | 65,362 | 66,191 | 61,782 | |||||||||||
Non-GAAP (2) | 72,683 | 72,441 | 65,362 | 71,066 | 62,707 |
(1) | Includes net unrealized gains of $10.7 million and realized gain of $12.3 million for the twelve months ended December 31, 2021. |
(2) | Non-GAAP diluted income per common share factors in higher diluted weighted average shares outstanding in periods where there is both a GAAP net loss and non-GAAP net income. |
AXON ENTERPRISE, INC. | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(in thousands) | ||||||
31 DEC 2021 | 31 DEC 2020 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 356,332 | $ | 155,440 | ||
Marketable securities | 72,180 | |||||
Short-term investments | 14,510 | 406,525 | ||||
Accounts and notes receivable, net | 320,819 | 229,201 | ||||
Contract assets, net | 180,421 | 63,945 | ||||
Inventory, net | 108,688 | 89,958 | ||||
Prepaid expenses and other current assets | 56,540 | 36,883 | ||||
Total current assets | 1,109,490 | 981,952 | ||||
Property and equipment, net | 138,457 | 105,494 | ||||
Deferred tax assets, net | 127,193 | 45,770 | ||||
Intangible assets, net | 15,470 | 9,448 | ||||
Goodwill | 43,592 | 25,205 | ||||
Long-term investments | 31,232 | 90,681 | ||||
Long-term notes receivable, net | 11,256 | 22,457 | ||||
Long-term contract assets, net | 29,753 | 20,099 | ||||
Strategic Investments | 83,520 | 11,711 | ||||
Other long-term assets | 98,247 | 68,206 | ||||
Total assets | $ | 1,688,210 | $ | 1,381,023 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | 32,220 | 24,142 | ||||
Accrued liabilities | 103,707 | 59,843 | ||||
Current portion of deferred revenue | 265,591 | 163,959 | ||||
Customer deposits | 10,463 | 2,956 | ||||
Other current liabilities | 6,540 | 5,431 | ||||
Total current liabilities | 418,521 | 256,331 | ||||
Deferred revenue, net of current portion | 185,721 | 111,222 | ||||
Liability for unrecognized tax benefits | 3,797 | 4,503 | ||||
Long-term deferred compensation | 5,679 | 4,732 | ||||
Deferred tax liabilities, net | 811 | 649 | ||||
Other long-term liabilities | 25,832 | 27,331 | ||||
Total liabilities | 640,361 | 404,768 | ||||
Stockholders' Equity: | ||||||
Preferred stock | — | — | ||||
Common stock | 1 | 1 | ||||
Additional paid-in capital | 1,095,229 | 962,159 | ||||
Treasury stock | (155,947) | (155,947) | ||||
Retained earnings | 109,883 | 169,901 | ||||
Accumulated other comprehensive income (loss) | (1,317) | 141 | ||||
Total stockholders' equity | 1,047,849 | 976,255 | ||||
Total liabilities and stockholders' equity | $ | 1,688,210 | $ | 1,381,023 |
AXON ENTERPRISE, INC. | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
(in thousands) | ||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||||||||||
31 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | 31 DEC 2021 | 31 DEC 2020 | ||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income (loss) | $ | (13,508) | $ | 48,524 | $ | 25,834 | $ | (60,018) | $ | (1,724) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by | ||||||||||||||||
Depreciation and amortization | 5,274 | 4,838 | 3,531 | 18,694 | 12,475 | |||||||||||
Loss on disposal and abandonment of intangible assets | 16 | — | 68 | 146 | 320 | |||||||||||
Loss on disposal and impairment of property and equipment, net | 18 | 31 | 293 | 92 | 1,722 | |||||||||||
Net loss (gain) on strategic investments and marketable securities | 11,160 | 6,660 | — | (23,035) | — | |||||||||||
Stock-based compensation | 41,110 | 35,062 | 53,448 | 303,331 | 133,572 | |||||||||||
Deferred income taxes | (22,410) | (52,004) | (4,858) | (81,303) | (16,528) | |||||||||||
Unrecognized tax benefits | (783) | 30 | 98 | (706) | 671 | |||||||||||
Bond premium amortization | 611 | 1,496 | — | 5,217 | 3,345 | |||||||||||
Noncash lease expense | 1,486 | 1,437 | 2,876 | 5,573 | 4,104 | |||||||||||
Provision for expected credit losses | (829) | 553 | 526 | (214) | 1,302 | |||||||||||
Change in assets and liabilities: | ||||||||||||||||
Accounts and notes receivable and contract assets | (87,675) | (114,106) | (59,211) | (205,769) | (107,762) | |||||||||||
Inventory | (15,118) | (1,306) | 7,215 | (18,272) | (52,156) | |||||||||||
Prepaid expenses and other assets | (11,252) | (15,586) | (10,063) | (40,158) | (14,885) | |||||||||||
Accounts payable, accrued and other liabilities | 16,773 | 38,909 | (16,479) | 45,301 | 8,886 | |||||||||||
Deferred revenue | 88,057 | 61,911 | 31,040 | 175,615 | 65,139 | |||||||||||
Net cash provided by operating activities | 12,930 | 16,449 | 34,318 | 124,494 | 38,481 | |||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of investments | — | (124,191) | (139,835) | (362,479) | (656,522) | |||||||||||
Proceeds from call, maturity, or sale of investments | 219,445 | 204,358 | 92,640 | 718,617 | 379,839 | |||||||||||
Proceeds from sale of strategic investments | — | — | — | 14,546 | — | |||||||||||
Purchases of property and equipment | (13,385) | (12,470) | (6,606) | (49,886) | (72,629) | |||||||||||
Purchases of intangible assets | (235) | (14) | (64) | (392) | (241) | |||||||||||
Proceeds from disposal from property and equipment | 12 | (17) | 1 | 43 | 95 | |||||||||||
Purchases of strategic investments | (25,000) | — | (2,368) | (45,500) | (7,068) | |||||||||||
Business acquisition, net of cash acquired | (21,693) | (700) | — | (22,393) | — | |||||||||||
Net cash provided by (used in) investing activities | 159,144 | 66,966 | (56,232) | 252,556 | (356,526) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||
Net proceeds from equity offering | (101) | 105,615 | — | 105,514 | 306,779 | |||||||||||
Proceeds from options exercised | 51,614 | — | — | 51,614 | 295 | |||||||||||
Income and payroll tax payments for net-settled stock awards | (148,792) | (172,205) | (923) | (331,309) | (7,809) | |||||||||||
Net cash provided by (used in) financing activities | (97,279) | (66,590) | (923) | (174,181) | 299,265 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (155) | (1,508) | 2,279 | (1,982) | 1,976 | |||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 74,640 | 15,317 | (20,558) | 200,887 | (16,804) | |||||||||||
Cash and cash equivalents and restricted cash, beginning of period | 281,798 | 266,481 | 176,109 | 155,551 | 172,355 | |||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | 356,438 | $ | 281,798 | $ | 155,551 | $ | 356,438 | $ | 155,551 |
AXON ENTERPRISE, INC. | |||||||||||||||
SELECTED CASH FLOW INFORMATION | |||||||||||||||
(Unaudited) | |||||||||||||||
(in thousands) | |||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||
31 DEC 2021 | 30 SEP 2021 | 31 DEC 2020 | 31 DEC 2021 | 31 DEC 2020 | |||||||||||
Net cash provided by operating activities | $ | 12,930 | $ | 16,449 | $ | 34,318 | $ | 124,494 | $ | 38,481 | |||||
Purchases of property and equipment | (13,385) | (12,470) | (6,606) | (49,886) | (72,629) | ||||||||||
Purchases of intangible assets | (235) | (14) | (64) | (392) | (241) | ||||||||||
Free cash flow, a non-GAAP measure | $ | (690) | $ | 3,965 | $ | 27,648 | $ | 74,216 | $ | (34,389) | |||||
Net campus investment | 3,391 | 3,128 | — | 10,297 | 54,152 | ||||||||||
Adjusted free cash flow, a non-GAAP measure | $ | 2,701 | $ | 7,093 | $ | 27,648 | $ | 84,513 | $ | 19,763 | |||||
AXON ENTERPRISE, INC. | ||||||
SUPPLEMENTAL TABLES | ||||||
(in thousands) | ||||||
31 DEC 2021 | 31 DEC 2020 | |||||
(Unaudited) | ||||||
Cash and cash equivalents | $ | 356,332 | $ | 155,440 | ||
Short-term investments | 14,510 | 406,525 | ||||
Long-term investments | 31,232 | 90,681 | ||||
Total cash and cash equivalents and investments, net | $ | 402,074 | $ | 652,646 |
CONTACT:
Investor Relations
Axon Enterprise, Inc.
IR@axon.com
View original content to download multimedia:https://www.prnewswire.com/news-releases/axon-reports-2021-results-third-straight-year-of-25-revenue-growth-301490137.html
SOURCE Axon
Copyright 2022 PR Newswire
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