AXON ENTERPRISE, INC. Annual Report, Year Ended Dec 31, 2019

Axon Enterprise, Inc. (Axon) demonstrated significant revenue growth in its 2019 fiscal year, reaching $530.9 million, 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 million 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 billion by year-end, indicating strong future contracted revenue, with a significant portion coming from the Software and Sensors segment.