SCOTTSDALE, Ariz., Feb. 27, 2020 /PRNewswire/ -- Axon (Nasdaq: AAXN), the global leader in connected public safety technologies, today released the following quarterly update letter to shareholders.
Dear Shareholders,
We are pleased to report a strong finish to 2019.
Revenue grew 26% to $531 million for the year, driven by demand for our latest generation camera, Axon Body 3, the cloud-connected TASER 7, and our cloud software.
Bottom line performance reflects our ability to scale manufacturing of TASER 7, continued growth of higher margin Axon Cloud revenue (up 41% for the full year), and cost control discipline. While net income was affected by catch-up stock compensation expense, we delivered a record $88 million in adjusted EBITDA for the full year, up 43%, and Q4 2019 adjusted EBITDA more than tripled to $38 million, reflecting a 22% margin.
The successful launch of Axon Body 3 drove record Q4 2019 sales of $172 million, up 50%, and holds tremendous strategic value. Customers are enthusiastic about better core performance and situational awareness features such as live-video streaming and real-time alerts. With LTE connectivity, GPS and a more powerful CPU for edge-AI processing, Axon Body 3 is designed to improve officer performance and drive adoption of SaaS features. Importantly, this is expected to fuel continued growth in annual recurring SaaS revenue. Axon Body 3's communications capabilities also pave the way for adoption of the emergency dispatch solution we are bringing to market this year.
Our strategic focus on driving recurring cash flow and building a self-reinforcing SaaS-centric business is working. For example, in 2019:
We continue to see customer enthusiasm for Axon Records, which underscores the effectiveness of our go-to-market strategy. We've made it attractive for agencies to start using Records by including it as a built-in benefit to our highest tier Officer Safety Plan — and some agencies will be able to fund the majority of their upgrade to that tier with savings from transitioning their legacy records management system to Axon Records.
Our strategic priorities in 2020 include continuing to execute in our core market, while accelerating our path-to-market in new product categories such as de-escalation and communications, and expanding to new customer categories. This will position us to achieve a higher level of annual recurring SaaS revenue over the long term. Specifically:
Unlocking new opportunities means Axon's strategic growth areas have evolved and expanded into:
By 2030, we believe:
Summary of Q4 2019 results:
Financial commentary by segment:
TASER:
THREE MONTHS ENDED | CHANGE | ||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | QoQ | YoY | |||||||||||||
(in thousands) | |||||||||||||||||
Net sales | $ | 83,955 | $ | 71,743 | $ | 65,301 | 17.0 | % | 28.6 | % | |||||||
Gross margin | 60.5 | % | 63.1 | % | 65.0 | % | -260bp | -450bp | |||||||||
Software & Sensors:
THREE MONTHS ENDED | CHANGE | ||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | QoQ | YoY | |||||||||||||
(in thousands) | |||||||||||||||||
Axon Cloud net sales | $ | 36,805 | $ | 34,021 | $ | 25,774 | 8.2 | % | 42.8 | % | |||||||
Axon Cloud gross margin | 76.1 | % | 75.8 | % | 74.5 | % | 30bp | 160bp | |||||||||
Sensors and Other net sales | $ | 51,091 | $ | 25,073 | $ | 23,716 | 103.8 | % | 115.4 | % | |||||||
Sensors and Other gross margin | 27.0 | % | 36.4 | % | 15.7 | % | -940bp | 1,130bp |
Forward-Looking Performance Indicators:
31 DEC 2019 | 30 SEP 2019 | 30 JUN 2019 | 31 MAR 2019 | 31 DEC 2018 | |||||||||||||||
($ in thousands) | |||||||||||||||||||
Annual recurring revenue (1) | $ | 161,277 | $ | 141,540 | $ | 129,452 | $ | 122,276 | $ | 108,496 | |||||||||
Total company future contracted revenue | $ | 1,230,000 | $ | 1,130,000 | $ | 1,050,000 | $ | 930,000 | $ | 900,000 | |||||||||
Percentage of TASER devices sold on a recurring payment plan | 58 | % | 55 | % | 60 | % | 42 | % | 35 | % |
(1) Monthly recurring license, integration, warranty, and storage revenue annualized.
Outlook:
For the full year 2020, we expect to achieve:
This is an exciting time for Axon and its customers -- the products we are bringing to market are fundamentally improving public safety, creating massive societal value, and saving lives. Thank you for joining us on this journey.
Signed,
Rick Smith, CEO
Luke Larson, President
Jawad Ahsan, CFO
Quarterly conference call and Webcast
We will host our Q4 2019 earnings conference call on February 27 at 2 p.m. PT / 5 p.m. ET.
The call will be available via live audio webcast and archived replay on Axon's investor relations website at https://investor.axon.com.
Statistical Definitions
Software and Sensors bookings are an indication of the activity the Company is seeing relative to Software and Sensors hardware, software and Axon Evidence. 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. 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 Axon has entered into contracts for the delivery of products and services in the future and anticipates the contracts will be fulfilled, if agencies do not exercise contractual options, do not appropriate money in future year budgets or do enact a cancellation clause, revenue associated with these bookings may not ultimately be recognized, resulting in a future reduction to bookings.
For more information relative to our revenue recognition policies, please reference our SEC filings.
Non-GAAP Measures
To supplement the Company's financial results presented in accordance with GAAP, we present the non-GAAP financial measures of EBITDA, Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Diluted Earnings Per Share and Free Cash Flow. The Company's management uses these non-GAAP financial measures in evaluating the Company's performance in comparison to prior periods. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance, and when planning and forecasting our future periods. A reconciliation of GAAP to the non-GAAP financial measures is presented herein.
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 a network of devices, apps and people that helps public safety personnel become smarter and safer. With a mission of protecting life, our technologies give customers the confidence, focus and time they need to keep their communities safe. Our products impact every aspect of a public safety officer's day-to-day experience.
We work hard for those who put themselves in harm's way for all of us. More than 225,000 lives and countless dollars have been saved with the Axon network of devices, apps and people. Learn more at www.axon.com or by calling (800) 978-2737. Facebook is a trademark of Facebook, Inc.; LTE is a trademark of the European Telecommunications Standards Institute; Oculus is a trademark of Facebook Technologies, LLC; Twitter is a trademark of Twitter, Inc. and Zoom is a trademark of Zoom Video Communications, Inc.
Axon, Axon Records, Axon Dispatch, Axon Performance, Axon Standards, Axon Body, Redaction Assistant, Axon Accelerate, Axon Evidence, Axon Academy, Axon Fleet, TASER, TASER 7 and the Delta Logo are trademarks of Axon Enterprise, Inc., some of which are registered in the US and other countries. For more information, visit www.axon.com/legal. All rights reserved.
Follow Axon here:
Forward-looking statements
These forward-looking statements 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; expectations about customer behavior; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management's strategies, goals and objectives and other similar expressions; as well as the ultimate resolution of financial statement items requiring critical accounting estimates, including those set forth in our Form 10-K for the year ended December 31, 2019. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as "may," "will," "should," "could," "would," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," and similar expressions, as well as statements in future tense, identify forward-looking statements. However, not all forward-looking statements contain these identifying words.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. The following important factors could cause actual results to differ materially from those in the forward-looking statements: our ability to design, introduce and sell new products or features; our ability to defend against litigation and protect our intellectual property, and the resulting costs of this activity; our ability to manage our supply chain and avoid production delays, shortages, and impacts to expected gross margins; the impact of stock compensation expense, impairment expense, and income tax expense on our financial results; customer purchase behavior, including adoption of our software as a service delivery model; our exposure to cancellations of government contracts due to appropriation clauses, exercise of a cancellation clause, or non-exercise of contractually optional periods; negative media publicity regarding our products; the impact of product mix on projected gross margins; defects in our products; changes in the costs of product components and labor; loss of customer data, a breach of security, or an extended outage, including our reliance on third party cloud-based storage providers; exposure to international operational risks; delayed cash collections and possible credit losses due to our subscription model; changes in government regulations in the U.S. and in foreign markets, especially related to the classification of our product by the United States Bureau of Alcohol, Tobacco, Firearms and Explosives and to evolving regulations surrounding privacy and data protection; our ability to integrate acquired businesses; our ability to attract and retain key personnel; and counter-party risks relating to cash balances held in excess of FDIC insurance limits. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements. Our Annual Report on Form 10-K lists various important factors that could cause actual results to differ materially from expected and historical results. These factors are intended as cautionary statements for investors within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act. Readers can find them under the heading "Risk Factors" in the Annual Report on Form 10-K and in the Quarterly Report on Form 10-Q, and investors should refer to them. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports to the SEC.
Please visit https://investor.axon.com, https://www.axon.com/press, www.twitter.com/axon_us and https://www.facebook.com/Axon.ProtectLife/ where Axon discloses information about the company, its financial information, and its business.
For investor relations information please contact Andrea James via email at [email protected].
AXON ENTERPRISE, INC. | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | 31 DEC 2019 | 31 DEC 2018 | |||||||||||||||
Net sales from products | $ | 134,497 | $ | 96,497 | $ | 89,017 | $ | 399,474 | $ | 327,635 | |||||||||
Net sales from services | 37,354 | 34,340 | 25,774 | 131,386 | 92,433 | ||||||||||||||
Net sales | 171,851 | 130,837 | 114,791 | 530,860 | 420,068 | ||||||||||||||
Cost of product sales | 70,418 | 42,445 | 42,863 | 190,683 | 139,337 | ||||||||||||||
Cost of service sales | 8,793 | 8,223 | 6,582 | 32,891 | 22,148 | ||||||||||||||
Cost of sales | 79,211 | 50,668 | 49,445 | 223,574 | 161,485 | ||||||||||||||
Gross margin | 92,640 | 80,169 | 65,346 | 307,286 | 258,583 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Sales, general and administrative | 78,281 | 48,424 | 42,099 | 212,959 | 156,886 | ||||||||||||||
Research and development | 28,745 | 25,129 | 21,254 | 100,721 | 76,856 | ||||||||||||||
Total operating expenses | 107,026 | 73,553 | 63,353 | 313,680 | 233,742 | ||||||||||||||
Income (loss) from operations | (14,386) | 6,616 | 1,993 | (6,394) | 24,841 | ||||||||||||||
Interest and other income, net | 2,486 | 1,820 | 1,021 | 8,464 | 3,263 | ||||||||||||||
Income (loss) before provision for income taxes | (11,900) | 8,436 | 3,014 | 2,070 | 28,104 | ||||||||||||||
Provision for (benefit from) income taxes | 479 | 2,332 | 931 | 1,188 | (1,101) | ||||||||||||||
Net income (loss) | $ | (12,379) | $ | 6,104 | $ | 2,083 | $ | 882 | $ | 29,205 | |||||||||
Net income (loss) per common and common equivalent shares: | |||||||||||||||||||
Basic | $ | (0.21) | $ | 0.10 | $ | 0.04 | $ | 0.01 | $ | 0.52 | |||||||||
Diluted | $ | (0.21) | $ | 0.10 | $ | 0.03 | $ | 0.01 | $ | 0.50 | |||||||||
Weighted average number of common and common equivalent shares outstanding: | |||||||||||||||||||
Basic | 59,374 | 59,278 | 58,502 | 59,190 | 56,392 | ||||||||||||||
Diluted | 60,257 | 60,059 | 59,665 | 60,018 | 57,922 |
AXON ENTERPRISE, INC. | |||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | |||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED 31 DEC 2019 | THREE MONTHS ENDED 30 SEP 2019 | THREE MONTHS ENDED 31 DEC 2018 | |||||||||||||||||||||||||||||||||
TASER | Software | Total | TASER | Software | Total | TASER | Software | Total | |||||||||||||||||||||||||||
Net sales from products (1) | $ | 83,406 | $ | 51,091 | $ | 134,497 | $ | 71,424 | $ | 25,073 | $ | 96,497 | $ | 65,301 | $ | 23,716 | $ | 89,017 | |||||||||||||||||
Net sales from services (2) | 549 | 36,805 | 37,354 | 319 | 34,021 | 34,340 | — | 25,774 | 25,774 | ||||||||||||||||||||||||||
Net sales | 83,955 | 87,896 | 171,851 | 71,743 | 59,094 | 130,837 | 65,301 | 49,490 | 114,791 | ||||||||||||||||||||||||||
Cost of product sales | 33,144 | 37,274 | 70,418 | 26,504 | 15,941 | 42,445 | 22,874 | 19,989 | 42,863 | ||||||||||||||||||||||||||
Cost of service sales | — | 8,793 | 8,793 | — | 8,223 | 8,223 | — | 6,582 | 6,582 | ||||||||||||||||||||||||||
Cost of sales | 33,144 | 46,067 | 79,211 | 26,504 | 24,164 | 50,668 | 22,874 | 26,571 | 49,445 | ||||||||||||||||||||||||||
Gross margin | 50,811 | 41,829 | 92,640 | 45,239 | 34,930 | 80,169 | 42,427 | 22,919 | 65,346 | ||||||||||||||||||||||||||
Gross margin % | 60.5 | % | 47.6 | % | 53.9 | % | 63.1 | % | 59.1 | % | 61.3 | % | 65.0 | % | 46.3 | % | 56.9 | % | |||||||||||||||||
Research and development | 4,185 | 24,560 | 28,745 | 3,485 | 21,644 | 25,129 | 5,196 | 16,058 | 21,254 |
TWELVE MONTHS ENDED 31 DEC 2019 | TWELVE MONTHS ENDED 31 DEC 2018 | ||||||||||||||||||||||
TASER | Software and | Total | TASER | Software and | Total | ||||||||||||||||||
Net sales from products (1) | $ | 280,554 | $ | 118,920 | $ | 399,474 | $ | 253,115 | $ | 74,520 | $ | 327,635 | |||||||||||
Net sales from services (2) | 1,107 | 130,279 | 131,386 | — | 92,433 | 92,433 | |||||||||||||||||
Net sales | 281,661 | 249,199 | 530,860 | 253,115 | 166,953 | 420,068 | |||||||||||||||||
Cost of product sales | 107,188 | 83,495 | 190,683 | 80,354 | 58,983 | 139,337 | |||||||||||||||||
Cost of service sales | — | 32,891 | 32,891 | — | 22,148 | 22,148 | |||||||||||||||||
Cost of sales | 107,188 | 116,386 | 223,574 | 80,354 | 81,131 | 161,485 | |||||||||||||||||
Gross margin | 174,473 | 132,813 | 307,286 | 172,761 | 85,822 | 258,583 | |||||||||||||||||
Gross margin % | 61.9 | % | 53.3 | % | 57.9 | % | 68.3 | % | 51.4 | % | 61.5 | % | |||||||||||
Research and development | 14,469 | 86,252 | 100,721 | 17,012 | 59,844 | 76,856 |
(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 2019 | 31 DEC 2018 | Unit | Percent Change | 31 DEC | 31 DEC | Unit | Percent Change | ||||||||||||||||
TASER 7 | 14,577 | 5,759 | 8,818 | 153.1 | % | 49,221 | 5,759 | 43,462 | 754.7 | % | |||||||||||||
TASER X26P | 13,554 | 18,597 | (5,043) | (27.1) | 48,798 | 71,823 | (23,025) | (32.1) | |||||||||||||||
TASER X2 | 11,534 | 13,088 | (1,554) | (11.9) | 40,973 | 65,855 | (24,882) | (37.8) | |||||||||||||||
TASER Pulse and Bolt | 2,978 | 7,490 | (4,512) | (60.2) | 11,785 | 18,398 | (6,613) | (35.9) | |||||||||||||||
Cartridges | 962,519 | 600,690 | 361,829 | 60.2 | 2,751,603 | 2,342,897 | 408,706 | 17.4 | |||||||||||||||
Axon Body | 83,268 | 26,167 | 57,101 | 218.2 | 151,499 | 85,965 | 65,534 | 76.2 | |||||||||||||||
Axon Flex | 3,078 | 5,080 | (2,002) | (39.4) | 15,586 | 15,541 | 45 | 0.3 | |||||||||||||||
Axon Fleet | 3,324 | 3,908 | (584) | (14.9) | 10,467 | 9,445 | 1,022 | 10.8 | |||||||||||||||
Axon Dock | 10,149 | 3,859 | 6,290 | 163.0 | 22,275 | 17,762 | 4,513 | 25.4 | |||||||||||||||
TASER Cam | 1,177 | 1,952 | (775) | (39.7) | 5,533 | 8,310 | (2,777) | (33.4) |
AXON ENTERPRISE, INC. | |||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Dollars in thousands | |||||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | 31 DEC 2019 | 31 DEC 2018 | |||||||||||||||
EBITDA and Adjusted EBITDA: | |||||||||||||||||||
Net income (loss) | $ | (12,379) | $ | 6,104 | $ | 2,083 | $ | 882 | $ | 29,205 | |||||||||
Depreciation and amortization | 3,165 | 2,709 | 2,389 | 11,361 | 10,615 | ||||||||||||||
Interest expense | 19 | 4 | 33 | 46 | 86 | ||||||||||||||
Investment interest income | (1,760) | (1,647) | (1,076) | (7,040) | (3,002) | ||||||||||||||
Provision for (benefit from) income taxes | 479 | 2,332 | 931 | 1,188 | (1,101) | ||||||||||||||
EBITDA | $ | (10,476) | $ | 9,502 | $ | 4,360 | $ | 6,437 | $ | 35,803 | |||||||||
Adjustments: | |||||||||||||||||||
Stock-based compensation expense | $ | 48,300 | $ | 13,663 | $ | 6,577 | $ | 78,495 | $ | 21,879 | |||||||||
Transaction costs and adjustments related to business acquisition | — | — | — | — | 1,382 | ||||||||||||||
Loss on disposal and abandonment of intangible assets | 16 | 33 | 14 | 67 | 2,117 | ||||||||||||||
Loss on disposal and impairment of property and equipment, net | 134 | 845 | 13 | 2,542 | 303 | ||||||||||||||
Costs related to FTC litigation | 240 | — | — | 240 | — | ||||||||||||||
Adjusted EBITDA | $ | 38,214 | $ | 24,043 | $ | 10,964 | $ | 87,781 | $ | 61,484 | |||||||||
Net income (loss) as a percentage of net sales | (7.2) | % | 4.7 | % | 1.8 | % | 0.2 | % | 7.0 | % | |||||||||
Adjusted EBITDA as a percentage of net sales | 22.2 | % | 18.4 | % | 9.6 | % | 16.5 | % | 14.6 | % | |||||||||
Stock-based compensation expense: | |||||||||||||||||||
Cost of product and service sales | $ | 790 | $ | 312 | $ | 152 | $ | 1,565 | $ | 511 | |||||||||
Sales, general and administrative | 40,212 | 9,508 | 3,927 | 59,342 | 12,710 | ||||||||||||||
Research and development | 7,298 | 3,843 | 2,498 | 17,588 | 8,658 | ||||||||||||||
Total | $ | 48,300 | $ | 13,663 | $ | 6,577 | $ | 78,495 | $ | 21,879 |
AXON ENTERPRISE, INC. | |||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - continued | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Dollars in thousands | |||||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | 31 DEC 2019 | 31 DEC 2018 | |||||||||||||||
Non-GAAP net income: | |||||||||||||||||||
GAAP net income (loss) | $ | (12,379) | $ | 6,104 | $ | 2,083 | $ | 882 | $ | 29,205 | |||||||||
Non-GAAP adjustments: | |||||||||||||||||||
Stock-based compensation expense | 48,300 | 13,663 | 6,577 | 78,495 | 21,879 | ||||||||||||||
Loss on disposal and abandonment of intangible assets | 16 | 33 | 14 | 67 | 2,117 | ||||||||||||||
Loss on disposal and impairment of property and equipment, net | 134 | 845 | 13 | 2,542 | 303 | ||||||||||||||
Transaction costs and adjustments related to business acquisition | — | — | — | — | 1,382 | ||||||||||||||
Costs related to FTC litigation | 240 | — | — | 240 | — | ||||||||||||||
Income tax effects | (11,863) | (3,654) | (1,737) | (20,068) | (6,366) | ||||||||||||||
Income tax benefit of CEO stock option exercise | — | — | (2,321) | — | (5,683) | ||||||||||||||
Non-GAAP net income | $ | 24,448 | $ | 16,991 | $ | 4,629 | $ | 62,158 | $ | 42,837 |
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | 31 DEC 2019 | 31 DEC 2018 | |||||||||||||||
Non-GAAP diluted earnings per share: | |||||||||||||||||||
GAAP diluted earnings per share | $ | (0.21) | $ | 0.10 | $ | 0.03 | $ | 0.01 | $ | 0.50 | |||||||||
Non-GAAP adjustments: | |||||||||||||||||||
Stock-based compensation expense | 0.80 | 0.23 | 0.11 | 1.31 | 0.38 | ||||||||||||||
Loss on disposal and abandonment of intangible assets | 0.00 | 0.00 | 0.00 | 0.00 | 0.04 | ||||||||||||||
Loss on disposal and impairment of property and equipment, net | 0.00 | 0.01 | 0.00 | 0.04 | 0.01 | ||||||||||||||
Transaction costs and adjustments related to business acquisition | — | — | — | — | 0.02 | ||||||||||||||
Costs related to FTC litigation | 0.00 | — | — | 0.00 | — | ||||||||||||||
Income tax effects | (0.20) | (0.06) | (0.03) | (0.33) | (0.11) | ||||||||||||||
Income tax benefit of CEO stock option exercise | — | — | (0.04) | — | (0.10) | ||||||||||||||
Non-GAAP diluted earnings per share (1) | $ | 0.41 | $ | 0.28 | $ | 0.08 | $ | 1.04 | $ | 0.74 | |||||||||
Weighted average number of diluted common and common equivalent shares outstanding (in thousands) | 60,257 | 60,059 | 59,665 | 60,018 | 57,922 |
(1) The per share calculations for GAAP net income, Non-GAAP adjustments and Non-GAAP diluted earnings per share are each computed independently. Per share amounts may not sum due to rounding. |
AXON ENTERPRISE, INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands) | |||||||
31 DEC 2019 | 31 DEC 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 172,250 | $ | 349,462 | |||
Short-term investments | 178,534 | — | |||||
Accounts and notes receivable, net | 146,878 | 130,579 | |||||
Contract assets, net | 47,718 | 13,960 | |||||
Inventory, net | 38,845 | 33,763 | |||||
Prepaid expenses and other current assets | 34,866 | 30,391 | |||||
Total current assets | 619,091 | 558,155 | |||||
Property and equipment, net | 43,770 | 37,893 | |||||
Deferred tax assets, net | 27,688 | 19,347 | |||||
Intangible assets, net | 12,771 | 15,935 | |||||
Goodwill | 25,013 | 24,981 | |||||
Long-term investments | 45,499 | — | |||||
Long-term notes receivable, net of current portion | 31,598 | 40,230 | |||||
Other assets | 40,209 | 22,999 | |||||
Total assets | $ | 845,639 | $ | 719,540 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | 25,874 | 15,164 | |||||
Accrued liabilities | 45,001 | 41,092 | |||||
Current portion of deferred revenue | 117,864 | 107,016 | |||||
Customer deposits | 2,974 | 2,702 | |||||
Other current liabilities | 3,853 | 37 | |||||
Total current liabilities | 195,566 | 166,011 | |||||
Deferred revenue, net of current portion | 87,936 | 74,417 | |||||
Liability for unrecognized tax benefits | 3,832 | 2,849 | |||||
Long-term deferred compensation | 3,936 | 3,235 | |||||
Deferred tax liability | 354 | — | |||||
Other long-term liabilities | 10,520 | 5,704 | |||||
Total liabilities | 302,144 | 252,216 | |||||
Stockholders' Equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 1 | 1 | |||||
Additional paid-in capital | 528,272 | 453,400 | |||||
Treasury stock | (155,947) | (155,947) | |||||
Retained earnings | 172,265 | 171,383 | |||||
Accumulated other comprehensive loss | (1,096) | (1,513) | |||||
Total stockholders' equity | 543,495 | 467,324 | |||||
Total liabilities and stockholders' equity | $ | 845,639 | $ | 719,540 |
AXON ENTERPRISE, INC. | |||||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | 31 DEC 2019 | 31 DEC 2018 | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | (12,379) | $ | 6,104 | $ | 2,083 | $ | 882 | $ | 29,205 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 3,165 | 2,709 | 2,389 | 11,361 | 10,615 | ||||||||||||||
Loss on disposal and abandonment of intangible assets | 16 | 33 | 14 | 67 | 2,117 | ||||||||||||||
Loss (gain) on disposal and impairment of property and equipment, net | 134 | 845 | 13 | 2,542 | 303 | ||||||||||||||
Stock-based compensation | 48,300 | 13,663 | 6,577 | 78,495 | 21,879 | ||||||||||||||
Deferred income taxes | (4,041) | (2,635) | (1,266) | (7,987) | (3,592) | ||||||||||||||
Unrecognized tax benefits | 389 | (19) | 1,045 | 983 | 1,144 | ||||||||||||||
Other noncash, net | 1,005 | 1,101 | — | 3,928 | 34 | ||||||||||||||
Change in assets and liabilities: | |||||||||||||||||||
Accounts and notes receivable and contract assets | (8,333) | (19,491) | (16,471) | (38,830) | (67,643) | ||||||||||||||
Inventory | 1,399 | 1,213 | 5,771 | (4,903) | 14,804 | ||||||||||||||
Prepaid expenses and other assets | 2,122 | (6,206) | (658) | (9,845) | (12,739) | ||||||||||||||
Accounts payable, accrued liabilities and other liabilities | 18,495 | 3,224 | 9,200 | 4,967 | 13,506 | ||||||||||||||
Deferred revenue | (4,463) | 21,899 | 22,542 | 24,013 | 54,242 | ||||||||||||||
Net cash provided by operating activities | 45,809 | 22,440 | 31,239 | 65,673 | 63,875 | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchases of investments | (111,784) | (100,701) | — | (354,477) | (4,331) | ||||||||||||||
Proceeds from call / maturity of investments | 37,876 | 66,888 | 500 | 130,083 | 11,158 | ||||||||||||||
Purchases of property and equipment | (3,828) | (4,250) | (4,259) | (15,939) | (11,139) | ||||||||||||||
Purchases of intangible assets | (76) | 16 | (98) | (404) | (558) | ||||||||||||||
Business acquisitions, net of cash acquired | — | — | — | — | (4,990) | ||||||||||||||
Net cash used in investing activities | (77,812) | (38,047) | (3,857) | (240,737) | (9,860) | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Net proceeds from equity offering | — | — | — | — | 233,993 | ||||||||||||||
Proceeds from options exercised | 8 | 2 | 1,044 | 114 | 1,757 | ||||||||||||||
Income and payroll tax payments for net-settled stock awards | (783) | (1,136) | (2,154) | (4,051) | (14,127) | ||||||||||||||
Payment of contingent consideration for business acquisitions | — | — | (1,700) | — | (2,275) | ||||||||||||||
Net cash provided by (used in) financing activities | (775) | (1,134) | (2,810) | (3,937) | 219,348 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,007 | (426) | (393) | 329 | (774) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | (31,771) | (17,167) | 24,179 | (178,672) | 272,589 | ||||||||||||||
Cash and cash equivalents, beginning of period | 204,126 | 221,293 | 326,848 | 351,027 | 78,438 | ||||||||||||||
Cash and cash equivalents, end of period | $ | 172,355 | $ | 204,126 | $ | 351,027 | $ | 172,355 | $ | 351,027 |
AXON ENTERPRISE, INC. | |||||||||||||||||||
SELECTED CASH FLOW INFORMATION | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | ||||||||||||||||||
31 DEC 2019 | 30 SEP 2019 | 31 DEC 2018 | 31 DEC 2019 | 31 DEC 2018 | |||||||||||||||
Net cash provided by operating activities | $ | 45,809 | $ | 22,440 | $ | 31,239 | $ | 65,673 | $ | 63,875 | |||||||||
Purchases of property and equipment | (3,828) | (4,250) | (4,259) | (15,939) | (11,139) | ||||||||||||||
Purchases of intangible assets | (76) | 16 | (98) | (404) | (558) | ||||||||||||||
Cash flows related to business acquisitions | — | — | — | — | (4,990) | ||||||||||||||
Free cash flow, a non-GAAP measure | $ | 41,905 | $ | 18,206 | $ | 26,882 | $ | 49,330 | $ | 47,188 |
AXON ENTERPRISE, INC. | |||||||
SUPPLEMENTAL TABLES | |||||||
(in thousands) | |||||||
31 DEC 2019 | 31 DEC 2018 | ||||||
(Unaudited) | |||||||
Cash and cash equivalents | $ | 172,250 | $ | 349,462 | |||
Short-term investments | 178,534 | — | |||||
Long-term investments | 45,499 | — | |||||
Total cash and cash equivalents and investments | $ | 396,283 | $ | 349,462 |
CONTACT:
Investor Relations
Axon Enterprise, Inc.
[email protected]
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SOURCE Axon