PR Newswire
SCOTTSDALE, Ariz., Aug. 5, 2021
SCOTTSDALE, Ariz., Aug. 5, 2021 /PRNewswire/ --
Dear Shareholders,
We are pleased to report a strong quarter and strengthening outlook globally as we execute against our 2021 strategic priorities of growing our core, scaling new products, unlocking new markets and driving efficiency to fuel growth. Domestic strength was driven by city, county and state highway patrol demand for our TASER and body camera bundles, as well as Axon Fleet, and international strength reflects momentum in Latin America and Asia Pacific, across product lines.
Our financial performance is being fueled by increasing global demand for Axon's life-saving technology, including TASER devices, and expanding use cases for body cameras as live-streaming gains traction as a breakthrough in real-time situational awareness.
Situation: Shots fired at apartment complex
Agency: Midwestern U.S. agency with more than 100 sworn officers
Incident: A patrol lieutenant watch commander responded to calls about shots fired at an apartment complex. Officers identified the correct unit in the building, and entered for a welfare check. They discovered bullet holes in the walls and doors and a woman who demanded that the officers leave. They removed her from the scene and discovered two locked bedroom doors. The lieutenant removed his Axon Body 3, focused it on the locked doors and exited. He pulled up the body camera's live stream on his mobile phone and gave his phone to a SWAT sniper and the assembling quick reaction team, enabling them to surveil the apartment. A sergeant back at the police precinct also live-streamed the camera's view. As the SWAT team began to attempt to negotiate a surrender, they saw via live-stream one of the doors open and an unarmed suspect exited a room. The team quickly moved in and took the suspect into custody.
Select highlights
Strategic priority: Unlocking New Markets
International momentum: Axon's global expansion showed strong momentum in Q2 2021, with international revenue growing 60% year over year and international bookings nearly tripling versus Q2 2020. Some highlights:
Strategic priority: Scaling New Products
Axon Fleet 3 began shipping June 30: Built with ethics and privacy in mind, Axon's latest generation in-car video system features our AI-powered automated license plate reader (ALPR) service along with real-time situational awareness, including live-streaming, through Axon Respond.
We expect Axon Fleet 3 to be a game changer for in-car cameras because we've elevated the simple in-car dash camera to one that can automatically and simultaneously scan plates across multiple lanes of traffic at closing speeds up to 140 mph. Also, we've designed the system to be disruptively affordable to allow for ALPR deployment across an agency's entire fleet of police vehicles instead of just a small number of designated vehicles. We are seeing strong interest in and demand for Axon Fleet 3 and expect ALPR to be a software growth driver.
"We are excited to be one of the first agencies to trial the Axon Fleet 3 in-car camera system with ALPR and we are very impressed with the overall value of this advanced integration. Our agency prides itself on being at the forefront of public safety technology, and with the Fleet 3 ALPR technology, our officers will be able to better serve our community." — Lieutenant Jon Moses of Johns Creek Police Department
Axon VR Simulator announced: Public safety officers need more comprehensive training across multiple fronts, including empathy, tactical de-escalation, practical skills, and psychological coping strategies. VR offers an opportunity to help public safety officers better respond and we are making it easy for agencies to procure our services through integrated bundling with our TASER devices, body cameras and other cloud software services. Axon's VR bookings have grown more than eight-fold to nearly $8 million in the first half of 2021.
"We are always looking for opportunities to innovate and improve our officers' abilities to handle various calls for service. Axon's new training platform allows our officers to run through scenarios in the safety of a controlled learning environment. This technology lets us train more efficiently, benefiting the responding officer and our community." — Phoenix Police Chief Jeri Williams
In May, we began taking orders for our new wireless Virtual Reality (VR) Simulator Training, which features new content regularly. Axon's VR Simulator also integrates TASER 7 devices and training sidearms, so officers can use real hardware in the virtual world, creating muscle memory and familiar responses in the most critical high-risk situations while leveraging a fully-immersive environment. Phoenix PD plans to be the first agency to adopt Axon's new VR Simulator into its existing training curriculum.
The wireless simulator augments Axon's Community Engagement VR Training, first sold in 2018, and now used by more than 1,000 police agencies in the U.S. and Canada. Modules include schizophrenia, autism, suicidal ideation, hard of hearing, Alzheimer's/dementia, veteran post-traumatic stress injury, peer intervention and domestic violence.
Strategic priority: Expanding our Core and Scaling New Products
Real-Time Operations grows & evolves: Our software category growth drivers include the decision-making and communication tools that support real-time situational awareness through the sharing of information across myriad media, including voice, messaging, location mapping, and intelligence and evidence sharing.
"As the world watched our operation to support the removal of controversial statues in Charlottesville, Axon Respond was absolutely phenomenal in allowing us to execute a fluid plan while having every vantage point of the removal process, crowds, exit and entry points and anything else we needed to be aware of, right in front of us at all times." — Captain Steve Knick, Investigations Division Commander, Charlottesville Police Department
Also, we are seeing expanded use cases for our services in dispatching centers and in hostage negotiations.
Summary of Q2 2021 results:
(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. |
(2) | Under the shareholder-approved XSPP, participants have a 2.5-year mandatory holding period on net vested shares. Under the shareholder-approved CEO Performance Award, the CEO has a 2.5-year holding period from option exercise. |
Financial commentary by segment:
TASER
THREE MONTHS ENDED | CHANGE | |||||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | QoQ | YoY | ||||||||||||||
(in thousands) | ||||||||||||||||||
Net sales | $ | 112,528 | $ | 98,999 | $ | 70,490 | 13.7 | % | 59.6 | % | ||||||||
Gross margin | 66.4 | % | 66.7 | % | 61.4 | % | (30) | bp | 500 | bp |
Software & Sensors
THREE MONTHS ENDED | CHANGE | |||||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | QoQ | YoY | ||||||||||||||
(in thousands) | ||||||||||||||||||
Axon Cloud net sales | $ | 60,477 | $ | 52,436 | $ | 41,891 | 15.3 | % | 44.4 | % | ||||||||
Axon Cloud gross margin | 74.5 | % | 75.1 | % | 77.9 | % | (60) | bp | (340) | bp | ||||||||
Sensors and Other net sales | $ | 45,790 | $ | 43,584 | $ | 28,878 | 5.1 | % | 58.6 | % | ||||||||
Sensors and Other gross margin | 39.7 | % | 41.1 | % | 42.6 | % | (140) | bp | (290) | bp |
Forward-looking performance indicators:
30 JUN 2021 | 31 MAR 2021 | 31 DEC 2020 | 30 SEP 2020 | 30 JUN 2020 | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Annual recurring revenue (1) | $ | 260,178 | $ | 242,357 | $ | 221,263 | $ | 203,815 | $ | 183,498 | ||||||||||
Net revenue retention (2) | 119 | % | 119 | % | 119 | % | 120 | % | 119 | % | ||||||||||
Total company future contracted revenue | $ | 2,040,000 | $ | 1,790,000 | $ | 1,730,000 | $ | 1,510,000 | $ | 1,340,000 | ||||||||||
Percentage of TASER devices sold on a recurring payment plan | 55 | % | 64 | % | 53 | % | 75 | % | 46 | % |
_______________________ | |
(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 expectations as of August 5, 2021, and are subject to risks and uncertainties. As our investments are yielding results ahead of our expectations thus far in 2021, we intend to continue investing for growth.
Our updated 2021 outlook is as follows:
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 Q2 2021 earnings conference call webinar on Thursday, August 5 at 2 p.m. PT / 5 p.m. ET.
The webcast will be available via a link on Axon's investor relations website at https://investor.axon.com, or can be accessed directly via https://axon.zoom.us/j/98547884069.
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 do 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 June 30, 2021. We expect to recognize between 20% - 25% 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 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 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 250,000 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.
LTE is a trademark of the European Telecommunications Standards Institute; Facebook is a trademark of Facebook, Inc.; Twitter is a trademark of Twitter, Inc. and Vievu is a trademark of Vievu, LLC. Axon, Axon Fleet, TASER, TASER 7, Protect Life and the Delta Logo are trademarks of Axon Enterprise, Inc., some of which are registered in the US and other countries. For more information, visit www.axon.com/legal All rights reserved.
Follow Axon here:
Forward-looking statements
Forward-looking statements in this letter include, without limitation, statements regarding: the impact of the COVID-19 pandemic; proposed products and services and related development efforts and activities; expectations about the market for our current and future products and services; 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 2021 full year revenue, Adjusted EBITDA, stock-based compensation expense, capital expenditures, and 2022 full year revenue; 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, 2020. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as "may," "will," "should," "could," "would," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," and similar expressions, as well as statements in future tense, identify forward-looking statements. However, not all forward-looking statements contain these identifying words.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. The following important factors could cause actual results to differ materially from those in the forward-looking statements: the potential global impacts of the COVID-19 pandemic; our exposure to cancellations of government contracts due to appropriation clauses, exercise of a cancellation clause, or non-exercise of contractually optional periods; our ability to design, introduce and sell new products or features; our ability to defend against litigation and protect our intellectual property, and the resulting costs of this activity; our ability to manage our supply chain and avoid production delays, shortages and impacts to expected gross margins; the impact of stock compensation expense, impairment expense, and income tax expense on our financial results; customer purchase behavior, including adoption of our software as a service delivery model; negative media publicity regarding our products; the impact of product mix on projected gross margins; defects in our products; changes in the costs of product components and labor; loss of customer data, a breach of security, or an extended outage, including by our third party cloud-based storage providers; exposure to international operational risks; delayed cash collections and possible credit losses due to our subscription model; changes in government regulations in the U.S. and in foreign markets, especially related to the classification of our products by the United States Bureau of Alcohol, Tobacco, Firearms and Explosives; our ability to integrate acquired businesses; our ability to attract and retain key personnel; 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 FTC while the FTC's separate antitrust administrative action against the company remains stayed.
As background, Axon's Federal 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, a Ninth Circuit panel in a 2-1 split decision affirmed the district court ruling against Axon on the jurisdictional question. The Court then denied Axon's petition for en banc rehearing but granted Axon's motion to stay the appellate mandate pending resolution of the company's certiorari petition with the U.S. Supreme Court.
Axon's Supreme Court petition (No. 21-86 docketed July 22, 2021) presents two questions:
1. Whether Congress impliedly stripped federal district courts of jurisdiction over constitutional challenges to the Federal Trade Commission'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.
2. Whether, on the merits, the structure of the Federal Trade Commission, including the dual-layer for-cause removal protections afforded its administrative law judges, is consistent with the Constitution.
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 Andrea James and Angel Ambrosio via email at [email protected].
AXON ENTERPRISE, INC. | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited) | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | 30 JUN 2021 | 30 JUN 2020 | |||||||||||
Net sales from products | $ | 156,427 | $ | 140,886 | $ | 98,755 | $ | 297,313 | $ | 206,043 | |||||
Net sales from services | 62,368 | 54,133 | 42,504 | 116,501 | 82,378 | ||||||||||
Net sales | 218,795 | 195,019 | 141,259 | 413,814 | 288,421 | ||||||||||
Cost of product sales | 65,301 | 58,616 | 43,825 | 123,917 | 92,709 | ||||||||||
Cost of service sales | 15,565 | 13,050 | 9,257 | 28,615 | 18,927 | ||||||||||
Cost of sales | 80,866 | 71,666 | 53,082 | 152,532 | 111,636 | ||||||||||
Gross margin | 137,929 | 123,353 | 88,177 | 261,282 | 176,785 | ||||||||||
Operating expenses: | |||||||||||||||
Sales, general and administrative | 177,662 | 126,597 | 72,293 | 304,259 | 135,320 | ||||||||||
Research and development | 53,952 | 47,018 | 29,560 | 100,970 | 55,941 | ||||||||||
Total operating expenses | 231,614 | 173,615 | 101,853 | 405,229 | 191,261 | ||||||||||
Loss from operations | (93,685) | (50,262) | (13,676) | (143,947) | (14,476) | ||||||||||
Interest and other income, net | 41,841 | 585 | 1,613 | 42,426 | 2,554 | ||||||||||
Income before provision for income taxes | (51,844) | (49,677) | (12,063) | (101,521) | (11,922) | ||||||||||
Provision for (benefit from) income taxes | (4,727) | (1,760) | 18,696 | (6,487) | 14,763 | ||||||||||
Net loss per common and common equivalent shares: | $ | (47,117) | $ | (47,917) | $ | (30,759) | $ | (95,034) | $ | (26,685) | |||||
Net loss per common and common equivalent shares: | |||||||||||||||
Basic | $ | (0.72) | $ | (0.75) | $ | (0.51) | $ | (1.47) | $ | (0.44) | |||||
Diluted | $ | (0.72) | $ | (0.75) | $ | (0.51) | $ | (1.47) | $ | (0.44) | |||||
Weighted average number of common and common equivalent shares outstanding: | |||||||||||||||
Basic | 65,166 | 64,036 | 60,346 | 64,604 | 59,977 | ||||||||||
Diluted | 65,166 | 64,036 | 60,346 | 64,604 | 59,977 |
AXON ENTERPRISE, INC. | ||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | ||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||
THREE MONTHS ENDED | THREE MONTHS ENDED | THREE MONTHS ENDED | ||||||||||||||||||||||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | ||||||||||||||||||||||||||||||||||
Software | Software | Software | ||||||||||||||||||||||||||||||||||
and | and | and | ||||||||||||||||||||||||||||||||||
TASER | Sensors | Total | TASER | Sensors | Total | TASER | Sensors | Total | ||||||||||||||||||||||||||||
Net sales from products (1) | $ | 110,637 | $ | 45,790 | $ | 156,427 | $ | 97,302 | $ | 43,584 | $ | 140,886 | $ | 69,877 | $ | 28,878 | $ | 98,755 | ||||||||||||||||||
Net sales from services (2) | 1,891 | 60,477 | 62,368 | 1,697 | 52,436 | 54,133 | 613 | 41,891 | 42,504 | |||||||||||||||||||||||||||
Net sales | 112,528 | 106,267 | 218,795 | 98,999 | 96,020 | 195,019 | 70,490 | 70,769 | 141,259 | |||||||||||||||||||||||||||
Cost of product sales | 37,701 | 27,600 | 65,301 | 32,945 | 25,671 | 58,616 | 27,242 | 16,583 | 43,825 | |||||||||||||||||||||||||||
Cost of service sales | 145 | 15,420 | 15,565 | — | 13,050 | 13,050 | — | 9,257 | 9,257 | |||||||||||||||||||||||||||
Cost of sales | 37,846 | 43,020 | 80,866 | 32,945 | 38,721 | 71,666 | 27,242 | 25,840 | 53,082 | |||||||||||||||||||||||||||
Gross margin | 74,682 | 63,247 | 137,929 | 66,054 | 57,299 | 123,353 | 43,248 | 44,929 | 88,177 | |||||||||||||||||||||||||||
Gross margin % | 66.4 | % | 59.5 | % | 63.0 | % | 66.7 | % | 59.7 | % | 63.3 | % | 61.4 | % | 63.5 | % | 62.4 | % | ||||||||||||||||||
Research and development | 12,313 | 41,639 | 53,952 | 9,243 | 37,775 | 47,018 | 3,762 | 25,798 | 29,560 | |||||||||||||||||||||||||||
SIX MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||||||||||||||||||||||
30 JUN 2021 | 30 JUN 2020 | |||||||||||||||||||||||||||||||||||
Software | Software | |||||||||||||||||||||||||||||||||||
and | and | |||||||||||||||||||||||||||||||||||
TASER | Sensors | Total | TASER | Sensors | Total | |||||||||||||||||||||||||||||||
Net sales from products (1) | $ | 207,939 | $ | 89,374 | $ | 297,313 | $ | 145,052 | $ | 60,991 | $ | 206,043 | ||||||||||||||||||||||||
Net sales from services (2) | 3,588 | 112,913 | 116,501 | 1,333 | 81,045 | 82,378 | ||||||||||||||||||||||||||||||
Net sales | 211,527 | 202,287 | 413,814 | 146,385 | 142,036 | 288,421 | ||||||||||||||||||||||||||||||
Cost of product sales | 70,646 | 53,271 | 123,917 | 57,490 | 35,219 | 92,709 | ||||||||||||||||||||||||||||||
Cost of service sales | 145 | 28,470 | 28,615 | — | 18,927 | 18,927 | ||||||||||||||||||||||||||||||
Cost of sales | 70,791 | 81,741 | 152,532 | 57,490 | 54,146 | 111,636 | ||||||||||||||||||||||||||||||
Gross margin | 140,736 | 120,546 | 261,282 | 88,895 | 87,890 | 176,785 | ||||||||||||||||||||||||||||||
Gross margin % | 66.5 | % | 59.6 | % | 63.1 | % | 60.7 | % | 61.9 | % | 61.3 | % | ||||||||||||||||||||||||
Research and development | 21,556 | 79,414 | 100,970 | 6,794 | 49,147 | 55,941 |
________________________ | |
(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 | SIX MONTHS ENDED | |||||||||||||||||
30 JUN | 30 JUN | Unit | Percent | 30 JUN | 30 JUN | Unit | Percent | |||||||||||
2021 | 2020 | Change | Change | 2021 | 2020 | Change | Change | |||||||||||
TASER 7 | 17,711 | 9,014 | 8,697 | 96.5 | % | 41,071 | 20,444 | 20,627 | 100.9 | % | ||||||||
TASER X26P | 7,012 | 7,658 | (646) | (8.4) | 15,241 | 18,661 | (3,420) | (18.3) | ||||||||||
TASER X2 | 9,788 | 13,100 | (3,312) | (25.3) | 18,626 | 23,578 | (4,952) | (21.0) | ||||||||||
TASER Pulse | 6,307 | 5,429 | 878 | 16.2 | 14,993 | 8,690 | 6,303 | 72.5 | ||||||||||
Cartridges | 1,413,329 | 715,268 | 698,061 | 97.6 | 2,423,089 | 1,588,632 | 834,457 | 52.5 | ||||||||||
Axon Body | 45,572 | 35,066 | 10,506 | 30.0 | 91,666 | 74,930 | 16,736 | 22.3 | ||||||||||
Axon Flex | 1,846 | 1,964 | (118) | (6.0) | 3,411 | 5,038 | (1,627) | (32.3) | ||||||||||
Axon Fleet | 2,462 | 2,327 | 135 | 5.8 | 3,902 | 5,003 | (1,101) | (22.0) | ||||||||||
Axon Dock | 5,283 | 4,634 | 649 | 14.0 | 12,069 | 9,931 | 2,138 | 21.5 |
AXON ENTERPRISE, INC. | ||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Dollars in thousands | ||||||||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | 30 JUN 2021 | 30 JUN 2020 | ||||||||||||
EBITDA and Adjusted EBITDA: | ||||||||||||||||
Net loss | $ | (47,117) | $ | (47,917) | $ | (30,759) | $ | (95,034) | $ | (26,685) | ||||||
Depreciation and amortization | 4,291 | 4,291 | 2,930 | 8,582 | 5,811 | |||||||||||
Interest expense | 17 | 5 | 5 | 22 | 12 | |||||||||||
Investment interest income | (502) | (533) | (1,499) | (1,035) | (2,192) | |||||||||||
Provision for (benefit from) income taxes | (4,727) | (1,760) | 18,696 | (6,487) | 14,763 | |||||||||||
EBITDA | $ | (48,038) | $ | (45,914) | $ | (10,627) | $ | (93,952) | $ | (8,291) | ||||||
Adjustments: | ||||||||||||||||
Stock-based compensation expense | $ | 137,549 | $ | 89,610 | $ | 33,835 | $ | 227,159 | $ | 54,030 | ||||||
Realized and unrealized gains on strategic investments (1) | (40,855) | — | — | (40,855) | — | |||||||||||
Transaction costs related to strategic investments | 110 | 385 | 90 | 495 | 923 | |||||||||||
Loss on disposal and abandonment of intangible assets | 119 | 11 | 100 | 130 | 113 | |||||||||||
Loss (gain) on disposal and impairment of property and equipment, net | (2) | 45 | 788 | 43 | 1,305 | |||||||||||
Costs related to FTC litigation | 147 | 233 | 3,834 | 380 | 9,969 | |||||||||||
Payroll taxes related to XSPP vesting | 2,217 | 1,452 | — | 3,669 | — | |||||||||||
Adjusted EBITDA | $ | 51,247 | $ | 45,822 | $ | 28,020 | $ | 97,069 | $ | 58,049 | ||||||
Net loss as a percentage of net sales | (21.5) | % | (24.6) | % | (21.8) | % | (23.0) | % | (9.3) | % | ||||||
Adjusted EBITDA as a percentage of net sales | 23.4 | % | 23.5 | % | 19.8 | % | 23.5 | % | 20.1 | % | ||||||
Stock-based compensation expense: | ||||||||||||||||
Cost of product and service sales | $ | 1,838 | $ | 1,489 | $ | 836 | $ | 3,327 | $ | 1,426 | ||||||
Sales, general and administrative | 114,089 | 71,015 | 26,766 | 185,104 | 41,736 | |||||||||||
Research and development | 21,622 | 17,106 | 6,233 | 38,728 | 10,868 | |||||||||||
Total | $ | 137,549 | $ | 89,610 | $ | 33,835 | $ | 227,159 | $ | 54,030 |
(1) Includes unrealized gains of $28.6 million and realized gain of $12.3 million. |
AXON ENTERPRISE, INC. | |||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - continued | |||||||||||||||
(Unaudited) | |||||||||||||||
Dollars in thousands, except per share amounts | |||||||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | 30 JUN 2021 | 30 JUN 2020 | |||||||||||
Non-GAAP net income: | |||||||||||||||
GAAP net loss | $ | (47,117) | $ | (47,917) | $ | (30,759) | $ | (95,034) | $ | (26,685) | |||||
Non-GAAP adjustments: | |||||||||||||||
Stock-based compensation expense | 137,549 | 89,610 | 33,835 | 227,159 | 54,030 | ||||||||||
Realized and unrealized gains on strategic investments (1) | (40,855) | — | — | (40,855) | — | ||||||||||
Loss on disposal and abandonment of intangible assets | 119 | 11 | 100 | 130 | 113 | ||||||||||
Loss (gain) on disposal and impairment of property and equipment, net | (2) | 45 | 788 | 43 | 1,305 | ||||||||||
Transaction costs related to strategic investments | 110 | 385 | 90 | 495 | 923 | ||||||||||
Costs related to FTC litigation | 147 | 233 | 3,834 | 380 | 9,969 | ||||||||||
Payroll taxes related to XSPP vesting | 2,217 | 1,452 | — | 3,669 | — | ||||||||||
Income tax effects | (24,826) | (22,780) | (8,530) | (47,606) | (16,367) | ||||||||||
Non-GAAP net income (loss) | $ | 27,342 | $ | 21,039 | $ | (642) | $ | 48,381 | $ | 23,288 | |||||
Diluted income (loss) per common share | |||||||||||||||
GAAP | $ | (0.72) | $ | (0.75) | $ | (0.51) | $ | (1.47) | $ | (0.44) | |||||
Non-GAAP | $ | 0.38 | $ | 0.31 | $ | (0.01) | $ | 0.70 | $ | 0.38 | |||||
Diluted weighted average shares outstanding | |||||||||||||||
GAAP | 65,166 | 64,036 | 60,346 | 64,604 | 59,977 | ||||||||||
Non-GAAP (2) | 71,689 | 67,392 | 60,346 | 69,544 | 60,671 |
_______________________ | |
(1) | Includes unrealized gains of $28.6 million and realized gain of $12.3 million. |
(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) | ||||||
30 JUN 2021 | 31 DEC 2020 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 266,372 | $ | 155,440 | ||
Short-term investments | 388,895 | 406,525 | ||||
Accounts and notes receivable, net | 201,907 | 229,201 | ||||
Contract assets, net | 86,561 | 63,945 | ||||
Inventory, net | 91,739 | 89,958 | ||||
Prepaid expenses and other current assets | 45,456 | 36,883 | ||||
Total current assets | 1,080,930 | 981,952 | ||||
Property and equipment, net | 119,933 | 105,494 | ||||
Deferred tax assets, net | 52,387 | 45,770 | ||||
Intangible assets, net | 7,870 | 9,448 | ||||
Goodwill | 25,178 | 25,205 | ||||
Long-term investments | 48,669 | 90,681 | ||||
Long-term notes receivable, net | 17,466 | 22,457 | ||||
Long-term contract assets, net | 31,691 | 20,099 | ||||
Strategic investments | 58,520 | 11,711 | ||||
Other assets | 84,244 | 68,206 | ||||
Total assets | $ | 1,526,888 | $ | 1,381,023 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current Liabilities: | ||||||
Accounts payable | 7,778 | 24,142 | ||||
Accrued liabilities | 66,908 | 59,843 | ||||
Current portion of deferred revenue | 186,909 | 163,959 | ||||
Customer deposits | 4,872 | 2,956 | ||||
Other current liabilities | 6,404 | 5,431 | ||||
Total current liabilities | 272,871 | 256,331 | ||||
Deferred revenue, net of current portion | 113,815 | 111,222 | ||||
Liability for unrecognized tax benefits | 4,550 | 4,503 | ||||
Long-term deferred compensation | 5,216 | 4,732 | ||||
Deferred tax liability | 377 | 649 | ||||
Other long-term liabilities | 32,360 | 27,331 | ||||
Total liabilities | 429,189 | 404,768 | ||||
Stockholders' Equity: | ||||||
Preferred stock | — | — | ||||
Common stock | 1 | 1 | ||||
Additional paid-in capital | 1,179,005 | 962,159 | ||||
Treasury stock | (155,947) | (155,947) | ||||
Retained earnings | 74,867 | 169,901 | ||||
Accumulated other comprehensive income (loss) | (227) | 141 | ||||
Total stockholders' equity | 1,097,699 | 976,255 | ||||
Total liabilities and stockholders' equity | $ | 1,526,888 | $ | 1,381,023 |
AXON ENTERPRISE, INC. | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
(in thousands) | ||||||||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | |||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | 30 JUN 2021 | 30 JUN 2020 | ||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (47,117) | $ | (47,917) | $ | (30,759) | $ | (95,034) | $ | (26,685) | ||||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 4,291 | 4,291 | 2,930 | 8,582 | 5,811 | |||||||||||
Loss on disposal and abandonment of intangible assets | 119 | 11 | 100 | 130 | 113 | |||||||||||
Loss (gain) on disposal and impairment of property and equipment, net | (2) | 45 | 788 | 43 | 1,305 | |||||||||||
Realized and unrealized gains on strategic investments | (40,855) | — | — | (40,855) | — | |||||||||||
Stock-based compensation | 137,549 | 89,610 | 33,835 | 227,159 | 54,030 | |||||||||||
Deferred income taxes | (6,291) | (598) | (4,604) | (6,889) | (6,152) | |||||||||||
Unrecognized tax benefits | (147) | 194 | 271 | 47 | 612 | |||||||||||
Other noncash, net | 3,145 | 2,615 | 1,440 | 5,760 | 2,596 | |||||||||||
Provision for expected credit losses | 397 | (335) | (244) | 62 | 658 | |||||||||||
Change in assets and liabilities: | ||||||||||||||||
Accounts and notes receivable and contract assets | (35,286) | 31,298 | 325 | (3,988) | (9,375) | |||||||||||
Inventory | (2,368) | 520 | (34,641) | (1,848) | (43,271) | |||||||||||
Prepaid expenses and other assets | (6,368) | (6,952) | (10,828) | (13,320) | (8,551) | |||||||||||
Accounts payable, accrued liabilities and other liabilities | 7,681 | (18,062) | 20,270 | (10,381) | 16,708 | |||||||||||
Deferred revenue | 19,428 | 6,219 | 725 | 25,647 | 5,224 | |||||||||||
Net cash provided by (used in) operating activities | 34,176 | 60,939 | (20,392) | 95,115 | (6,977) | |||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of investments | (82,463) | (155,825) | (193,085) | (238,288) | (292,597) | |||||||||||
Proceeds from call / maturity of investments | 162,560 | 132,254 | 74,355 | 294,814 | 158,670 | |||||||||||
Proceeds from sale of strategic investments | 14,546 | — | — | 14,546 | — | |||||||||||
Purchases of property and equipment | (13,510) | (10,521) | (5,342) | (24,031) | (7,551) | |||||||||||
Purchases of intangible assets | (102) | (41) | (66) | (143) | (111) | |||||||||||
Proceeds of disposal from property and equipment | 38 | 10 | — | 48 | 78 | |||||||||||
Strategic investments | (500) | (20,000) | — | (20,500) | (4,700) | |||||||||||
Net cash provided by (used in) investing activities | 80,569 | (54,123) | (124,138) | 26,446 | (146,211) | |||||||||||
Cash flows from financing activities: | ||||||||||||||||
Net proceeds from equity offering | — | — | 306,779 | — | 306,779 | |||||||||||
Proceeds from options exercised | — | — | 267 | — | 295 | |||||||||||
Income and payroll tax payments for net-settled stock awards | (3,267) | (7,045) | (577) | (10,312) | (5,767) | |||||||||||
Net cash provided by (used in) financing activities | (3,267) | (7,045) | 306,469 | (10,312) | 301,307 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 73 | (392) | 775 | (319) | (1,115) | |||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 111,551 | (621) | 162,714 | 110,930 | 147,004 | |||||||||||
Cash and cash equivalents, beginning of period | 154,930 | 155,551 | 156,645 | 155,551 | 172,355 | |||||||||||
Cash and cash equivalents, end of period | $ | 266,481 | $ | 154,930 | $ | 319,359 | $ | 266,481 | $ | 319,359 |
AXON ENTERPRISE, INC. | |||||||||||||||
SELECTED CASH FLOW INFORMATION | |||||||||||||||
(Unaudited) | |||||||||||||||
(in thousands) | |||||||||||||||
THREE MONTHS ENDED | SIX MONTHS ENDED | ||||||||||||||
30 JUN 2021 | 31 MAR 2021 | 30 JUN 2020 | 30 JUN 2021 | 30 JUN 2020 | |||||||||||
Net cash provided by (used in) operating activities | $ | 34,176 | $ | 60,939 | $ | (20,392) | $ | 95,115 | $ | (6,977) | |||||
Purchases of property and equipment | (13,510) | (10,521) | (5,342) | (24,031) | (7,551) | ||||||||||
Purchases of intangible assets | (102) | (41) | (66) | (143) | (111) | ||||||||||
Free cash flow, a non-GAAP measure | $ | 20,564 | $ | 50,377 | $ | (25,800) | $ | 70,941 | $ | (14,639) |
AXON ENTERPRISE, INC. | ||||||
SUPPLEMENTAL TABLES | ||||||
(in thousands) | ||||||
30 JUN 2021 | 31 DEC 2020 | |||||
(Unaudited) | ||||||
Cash and cash equivalents | $ | 266,372 | $ | 155,440 | ||
Short-term investments | 388,895 | 406,525 | ||||
Long-term investments | 48,669 | 90,681 | ||||
Total cash and cash equivalents and investments, net | $ | 703,936 | $ | 652,646 |
View original content to download multimedia:https://www.prnewswire.com/news-releases/axon-q2-2021-revenue-of-219-million-up-55-international-revenue-grows-60-raising-outlook-301349761.html
SOURCE Axon
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