10-KPeriod: FY2012

AXON ENTERPRISE, INC. Annual Report, Year Ended Dec 31, 2012

Filed March 8, 2013For Securities:AXON

Summary

Axon Enterprise, Inc. (formerly TASER International, Inc.) reported significant revenue growth in 2012, driven by strong performance in both its Conducted Electrical Weapons (CEW) segment and its burgeoning Video segment. The CEW segment saw an increase in sales, largely due to the popularity of the TASER X2 and the continued upgrade cycle from older models. The Video segment experienced substantial growth, primarily fueled by the adoption of the AXON Flex on-officer recording system and EVIDENCE.COM platform, indicating a successful expansion into new technological areas. The company's strategic focus on innovation, expanding market penetration (both domestically and internationally), and leveraging its installed customer base appears to be yielding positive financial results. Despite some ongoing litigation and the inherent risks in the technology sector, Axon Enterprise demonstrated improved operational efficiency and a return to profitability in 2012, ending the year with a healthy cash position and a clear path for continued growth in its core and emerging product lines.

Financial Highlights

49 data points
Beta

Revenue

$114.13M

59.3% Gross Margin

Net Income

$14.74M

12.9% Net Margin

EPS (Diluted)

$0.27

Total Assets

$116.24M

Cash & Equivalents

$36.13M

Free Cash Flow

$25.18M

Financial Statements
Beta
Revenue$114.13M
Cost of Revenue$47.04M
Gross Profit$67.72M
R&D Expenses$8.14M
SG&A Expenses$39.25M
Operating Expenses$45.19M
Operating Income$22.53M
Net Income$14.74M
EPS (Basic)$0.27
EPS (Diluted)$0.27
Shares Outstanding (Basic)53.83M
Shares Outstanding (Diluted)54.72M

Key Highlights

  • 1TASER International, Inc. rebranded as Axon Enterprise, Inc., reflecting a broader technological focus beyond CEWs.
  • 2Net sales increased by 27.5% to $114.8 million in 2012 compared to $90.0 million in 2011.
  • 3The CEW segment sales grew by 25.8% to $109.1 million, driven by the TASER X2 and upgrade cycles.
  • 4The Video segment sales grew by 69.9% to $5.7 million, with AXON Flex and EVIDENCE.COM showing strong adoption.
  • 5The company returned to profitability in 2012, reporting net income of $14.7 million, a significant improvement from a net loss of $7.0 million in 2011.
  • 6As of December 31, 2012, the company had $36.1 million in cash and cash equivalents.
  • 7The company actively repurchased its stock, completing $20 million in buybacks during 2012 and announcing a new $25 million program in February 2013.

Frequently Asked Questions

Axon Enterprise, Inc. is a leading provider of conducted electrical weapons (CEWs) for law enforcement, military, and civilian use. Additionally, the company offers a growing suite of technology solutions, including on-officer video recording systems (AXON) and cloud-based digital evidence management platforms (EVIDENCE.COM).

Revenue growth in 2012 was driven by strong sales of TASER CEWs, particularly the TASER X2 model, which benefited from an ongoing upgrade cycle among law enforcement agencies. Significant growth was also seen in the Video segment, with increasing adoption of AXON Flex cameras and EVIDENCE.COM services.

The company's strategy focuses on increasing market penetration for its CEW products both domestically and internationally, driving adoption of its video and digital evidence solutions, developing innovative new products, expanding sales channels (including leasing programs and telesales), and maintaining operational excellence. The company also emphasizes continued investment in R&D and protection of its intellectual property.

Key risks include material dependence on law enforcement acceptance of its products, potential delays or failures in new product development and market acceptance of its EVIDENCE.COM SaaS model, product defects, security breaches affecting customer data, government budget constraints affecting customer spending, potential personal injury/wrongful death liability claims, and intellectual property infringement claims. Intense competition in the video evidence market is also a factor.