10-KPeriod: FY2019

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

Filed February 28, 2020For Securities:AXON

Summary

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.

Financial Highlights

50 data points
Beta

Revenue

$530.86M

57.9% Gross Margin

Net Income

$882K

0.2% Net Margin

EPS (Diluted)

$0.01

Total Assets

$845.64M

Cash & Equivalents

$172.35M

Free Cash Flow

$49.73M

Financial Statements
Beta
Revenue$530.86M
Cost of Revenue$223.57M
Gross Profit$307.29M
R&D Expenses$100.72M
SG&A Expenses$212.96M
Operating Expenses$313.68M
Operating Income-$6.39M
Net Income$882K
EPS (Basic)$0.01
EPS (Diluted)$0.01
Shares Outstanding (Basic)59.19M
Shares Outstanding (Diluted)60.02M

Key Highlights

  • 1Revenue increased by 26.4% to $530.9 million in 2019, driven by strong performance in the Software and Sensors segment.
  • 2The Software and Sensors segment saw a 49.3% increase in net sales, with notable growth in Axon Body cameras and Evidence.com.
  • 3The TASER segment grew 11.3%, with cartridge sales and the new TASER 7 device contributing to the increase.
  • 4Net income decreased significantly to $0.9 million from $29.2 million in the prior year, impacted by higher operating expenses.
  • 5Stock-based compensation expenses surged due to CEO performance awards and the XSPP.
  • 6Research and Development (R&D) and Sales, General & Administrative (SG&A) expenses increased to support growth initiatives.
  • 7Total company future contracted revenue (backlog) reached $1.23 billion, signaling robust future revenue potential.

Frequently Asked Questions

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.

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.

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.

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.