10-QPeriod: Q1 FY2011

AXON ENTERPRISE, INC. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 9, 2011For Securities:AXON

Summary

TASER International, Inc. (now Axon Enterprise, Inc.) reported a net income of $19,732 for the first quarter of 2011, a significant improvement from a net loss of $492,605 in the same period of 2010. This turnaround was driven by a 3% decrease in net sales to $23.1 million, coupled with a reduction in operating expenses, particularly in sales, general, and administrative (SG&A) and research and development (R&D). While overall sales declined slightly, the company saw positive contributions from new products like AXON/EVIDENCE.com and XREP. Financially, the company maintained a healthy liquidity position with $41.6 million in cash, cash equivalents, and investments as of March 31, 2011. Operating activities generated $4.3 million in cash, which, along with existing cash reserves, was sufficient to fund operations, strategic initiatives like a $12.5 million stock repurchase program, and capital expenditures. The company also reported no outstanding debt, with access to a $10 million line of credit.

Financial Highlights

27 data points
Beta

Revenue

$23.12M

52.8% Gross Margin

Net Income

$20K

0.1% Net Margin

EPS (Diluted)

$0.00

Cash & Equivalents

$31.81M

Free Cash Flow

$4.03M

Financial Statements
Beta
Revenue$23.12M
Cost of Revenue$10.91M
Gross Profit$12.21M
R&D Expenses$2.75M
SG&A Expenses$9.35M
Operating Income$110K
Net Income$20K
Shares Outstanding (Basic)62.41M
Shares Outstanding (Diluted)63.25M

Key Highlights

  • 1Achieved profitability in Q1 2011 with a net income of $19,732, a significant improvement from a net loss of $492,605 in Q1 2010.
  • 2Net sales slightly decreased by 3.0% to $23.1 million, impacted by fewer large international orders and the tapering of federal stimulus funding that boosted prior-year sales.
  • 3Operating expenses were reduced, with SG&A down 9.3% and R&D expenses down 33.5%, contributing to the improved profitability.
  • 4The company launched new products like AXON/EVIDENCE.com and XREP, which contributed $0.5 million in sales in Q1 2011.
  • 5Maintained a strong liquidity position with $41.6 million in cash, cash equivalents, and investments as of March 31, 2011.
  • 6Initiated a $12.5 million stock repurchase program, having repurchased $5.1 million worth of shares by the end of Q1 2011.
  • 7No outstanding debt at quarter-end, with $4.1 million available under a $10 million line of credit.

Frequently Asked Questions

TASER International showed a significant turnaround in Q1 2011, reporting a net income of $19,732 compared to a net loss of $492,605 in the prior year's quarter. This improvement was driven by a slight decrease in net sales to $23.1 million and substantial reductions in operating expenses, particularly in SG&A and R&D.

Net sales decreased by 3.0% to $23.1 million. This was primarily attributed to fewer large international orders and the absence of federal stimulus funding that had boosted sales in the prior year. However, new products like AXON/EVIDENCE.com and XREP began contributing to revenue, totaling $0.5 million.

The company maintained a strong financial position with $41.6 million in cash, cash equivalents, and investments as of March 31, 2011. Operating activities generated positive cash flow of $4.3 million. The company also had no outstanding debt and had access to a $10 million line of credit, with $4.1 million available.

TASER International is involved in numerous product liability lawsuits alleging wrongful death or personal injury, with 51 pending cases at the time of filing. While the company believes these lawsuits will not materially affect its financial condition, the outcome of litigation is inherently uncertain. Additionally, the company noted a risk that the introduction of new product lines could negatively impact sales of existing ones.