01—Abstract
Summary
Summary of the 10-K filed February 28, 2020. Cited figures are marked; the original filing is the authoritative source.
Axon Enterprise, Inc. (Axon) demonstrated significant revenue growth in its 2019 fiscal year, reaching $530.9 milliona, a 26.4% increase year-over-year.
This growth was primarily driven by its Software and Sensors segment, which saw a 49.3% increase in net sales, largely due to strong performance in its Axon Body cameras and cloud-based Evidence.com services. The TASER segment also experienced growth, up 11.3%, propelled by cartridge sales and the introduction of the new TASER 7 device, though gross margins were compressed due to the new product's higher cost and bundled services. Despite the revenue expansion, the company reported a net income of $0.9 millionb for the year, a substantial decrease from $29.2 million in the prior year.
This decline was largely attributable to significant increases in operating expenses, particularly a substantial rise in stock-based compensation expenses related to CEO and employee performance awards, as well as increased R&D and SG&A spending to support future growth initiatives. The company's backlog also saw a considerable increase, reaching $1.23 billionc by year-end, indicating strong future contracted revenue, with a significant portion coming from the Software and Sensors segment.
02—Key points
Key Highlights
- Revenue increased by 26.4% to $530.9 million in 2019, driven by strong performance in the Software and Sensors segment.
- The Software and Sensors segment saw a 49.3% increase in net sales, with notable growth in Axon Body cameras and Evidence.com.
- The TASER segment grew 11.3%, with cartridge sales and the new TASER 7 device contributing to the increase.
- Net income decreased significantly to $0.9 million from $29.2 million in the prior year, impacted by higher operating expenses.
- Stock-based compensation expenses surged due to CEO performance awards and the XSPP.
- Research and Development (R&D) and Sales, General & Administrative (SG&A) expenses increased to support growth initiatives.
- Total company future contracted revenue (backlog) reached $1.23 billion, signaling robust future revenue potential.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Axon Enterprise, Inc. kept $0.00.
- Revenue$530.9M100.0%
- Cost of revenue−$223.6M42.1%
- Gross profit$307.3M57.9%
- Operating costs−$313.7M59.1%
- Operating income−$6.4M1.2%
- Interest, other & tax$7.3M1.4%
- Net income$882,0000.2%
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 28, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $530.86M$420.07M | +26.4% |
| Cost of Revenue | $223.57M$161.49M | +38.4% |
| Gross Profit | $307.29M$258.58M | +18.8% |
| R&D Expenses | $100.72M$76.86M | +31.1% |
| SG&A Expenses | $212.96M$156.89M | +35.7% |
| Operating Expenses | $313.68M$233.74M | +34.2% |
| Operating Income | -$6.39M$24.84M | −125.7% |
| Net Income | $882K$29.20M | −97.0% |
| EPS (Basic) | $0.01$0.52 | −98.1% |
| EPS (Diluted) | $0.01$0.50 | −98.0% |
| Shares Outstanding (Basic) | 59.19M56.39M | +5.0% |
| Shares Outstanding (Diluted) | 60.02M57.92M | +3.6% |
05—Questions
Frequently Asked Questions
What was Axon's overall financial performance in 2019?
Axon Enterprise, Inc. achieved substantial revenue growth in 2019, reaching $530.9 million, a 26.4% increase from the previous year. However, net income saw a significant decline to $0.9 million from $29.2 million in 2018, primarily due to increased operating expenses, including a substantial rise in stock-based compensation and higher R&D and SG&A costs for growth initiatives.
Which segment drove the revenue growth, and what were the key contributors?
The Software and Sensors segment was the primary driver of revenue growth, increasing by 49.3%. Key contributors included higher sales of Axon Body cameras (especially the new Axon Body 3) and continued expansion of its Axon Evidence cloud services. The TASER segment also grew by 11.3%, supported by increased cartridge sales and the rollout of the TASER 7 device.
What factors led to the decrease in net income despite revenue growth?
The decrease in net income was mainly due to a significant increase in operating expenses. Most notably, stock-based compensation expenses rose dramatically due to the vesting of performance awards for the CEO and the XSPP. Additionally, the company increased its investment in Research and Development (R&D) and Sales, General, and Administrative (SG&A) expenses to support ongoing and future growth strategies.
What is the significance of the company's backlog, and what does it represent?
Axon reported a total company future contracted revenue (backlog) of approximately $1.23 billion as of December 31, 2019. This backlog represents amounts that have been contracted but not yet recognized as revenue. It serves as an indicator of future revenue streams, with a significant portion attributed to the Software and Sensors segment, suggesting strong future growth potential for its cloud-based services and related hardware.
06—Continue