10-KPeriod: FY2009

AXON ENTERPRISE, INC. Annual Report, Year Ended Dec 31, 2009

Filed March 15, 2010For Securities:AXON

Summary

Axon Enterprise, Inc. (formerly TASER International, Inc.) in its March 15, 2010, 10-K filing, reported total net sales of $104.3 million for the year ended December 31, 2009. This represents a 12.3% increase from the previous year, driven by strong international sales (22% of total) and significant growth in federal and military markets, which offset a decline in domestic municipal spending due to economic constraints. The company's core product, the TASER X26, continued to be a primary revenue driver, along with a substantial contribution from single cartridge sales. Despite the revenue growth, the company experienced a net loss of $1,106 for 2009, a stark contrast to the $3.6 million net income in 2008. This was largely due to a significant increase in research and development (R&D) expenses, which more than doubled to $20 million in 2009, primarily driven by investments in new product development, including the AXON and EVIDENCE.COM digital evidence solution. The company maintains a strong balance sheet with $45.5 million in cash and cash equivalents and no debt, providing financial flexibility for continued investment in innovation and market expansion.

Financial Highlights

28 data points
Beta

Revenue

$104.25M

60.8% Gross Margin

Net Income

-$1K

-0.0% Net Margin

EPS (Diluted)

$0.00

Cash & Equivalents

$45.51M

Free Cash Flow

-$3.59M

Financial Statements
Beta
Revenue$104.25M
Cost of Revenue$40.85M
Gross Profit$63.40M
R&D Expenses$20.00M
SG&A Expenses$43.48M
Operating Expenses$63.48M
Operating Income-$79K
Net Income-$1K
Shares Outstanding (Basic)61.92M
Shares Outstanding (Diluted)61.92M

Key Highlights

  • 1Net sales increased by 12.3% to $104.3 million in 2009, driven by international and federal/military sales, partially offsetting a decline in domestic municipal spending.
  • 2International sales represented 22% of total net sales in 2009, up from 18% in 2008, indicating growing global adoption.
  • 3Federal and military markets significantly contributed to sales, accounting for approximately 13% of net sales in 2009, a substantial increase from 5% in 2008.
  • 4Research and development expenses more than doubled to $20.0 million in 2009, reflecting significant investment in new products like the AXON and EVIDENCE.COM digital evidence solution.
  • 5The company reported a net loss of $1,106 for 2009, a reversal from the $3.6 million net income in 2008, largely due to increased R&D spending.
  • 6Axon maintained a strong financial position with $45.5 million in cash and cash equivalents and no outstanding debt at the end of 2009.
  • 7The company launched initial field trials for its AXON and EVIDENCE.COM digital evidence solution in late 2009, signaling a strategic move into a new market segment.

Frequently Asked Questions

Revenue growth in 2009 was primarily driven by strong performance in international markets, which accounted for 22% of total net sales, and significant contributions from federal and military customers. These gains helped offset a slowdown in domestic municipal spending due to economic conditions.

The company is heavily investing in research and development, particularly in its new AXON and EVIDENCE.COM digital evidence collection and management solutions. They also introduced new ECD products like the X3, XREP, and Shockwave in 2009 and plan to continue expanding their product and service lines, as well as manufacturing capacity.

As of December 31, 2009, Axon had a healthy liquidity position with $45.5 million in cash and cash equivalents and no outstanding debt. They believe these resources, along with expected operating cash flows, are sufficient to fund operations and strategic initiatives for 2010.

Key risks include the company's material dependence on the acceptance of its products by law enforcement agencies, potential liability claims from product use, budgetary and political constraints of government customers, reliance on distributors, and the challenges of managing growth and ramping up production. There's also a risk associated with competition in the emerging video evidence market.