Summary
Axon Enterprise, Inc. reported robust top-line growth in 2017, with net sales increasing by 28.2% to $343.8 million. This growth was driven by both its established TASER Weapons segment, which saw a 15.7% increase in net sales, and its rapidly expanding Software and Sensors segment, which experienced a significant 66.6% surge in net sales. The company's strategic focus on its integrated ecosystem of devices, apps, and cloud services for law enforcement and public safety appears to be paying off. The substantial investment in R&D, particularly in AI and new sensor technologies, positions Axon for future innovation. However, investors should note the decline in net income and a decrease in gross margin percentage in 2017, primarily attributed to increased R&D spending and higher costs within the Software and Sensors segment, including data migration expenses and hardware discounting. Additionally, the company is addressing a material weakness in internal controls related to its UK subsidiary, which is being remediated.
Financial Highlights
52 data points| Revenue | $343.80M |
| Cost of Revenue | $136.71M |
| Gross Profit | $207.09M |
| R&D Expenses | $55.37M |
| SG&A Expenses | $138.69M |
| Operating Expenses | $194.06M |
| Operating Income | $13.02M |
| Net Income | $5.21M |
| EPS (Basic) | $0.10 |
| EPS (Diluted) | $0.10 |
| Shares Outstanding (Basic) | 52.73M |
| Shares Outstanding (Diluted) | 53.90M |
Key Highlights
- 1Net sales grew by 28.2% to $343.8 million in 2017, driven by strong performance in both TASER Weapons and Software and Sensors segments.
- 2The Software and Sensors segment demonstrated impressive growth, with net sales increasing by 66.6% to $109.3 million, indicating strong market adoption of Axon's connected solutions.
- 3Investment in Research & Development significantly increased by 80.9% to $55.4 million, reflecting a strategic focus on innovation and new product development, particularly in AI.
- 4Gross margin as a percentage of net sales decreased to 60.2% in 2017 from 63.6% in 2016, primarily due to hardware discounting and increased costs in the Software and Sensors segment.
- 5Net income saw a significant decline, falling to $5.2 million in 2017 from $17.3 million in 2016, impacted by increased operating expenses, particularly R&D.
- 6The company reported a substantial increase in backlog to $582.7 million as of December 31, 2017, signaling strong future revenue potential, especially in the Software and Sensors segment.
- 7A material weakness in internal controls over financial reporting was identified concerning the UK subsidiary, Axon Public Safety U.K. Ltd., with remediation efforts underway.