AXON ENTERPRISE, INC. Quarterly Report for Q1 Ended Mar 31, 2013

Summary

Axon Enterprise, Inc. (formerly TASER International, Inc.) reported solid revenue growth in the first quarter of 2013, with net sales increasing by 18.7% year-over-year to $30.4 million. This growth was primarily driven by strong adoption of the new TASER X2 and X26P conducted electrical weapons (CEWs), alongside continued momentum in the emerging Video segment which includes AXON cameras and EVIDENCE.com. While gross margins improved to 60.6% due to sales leverage and efficiencies in the Video segment, operating income saw a decline of 18.6% to $5.3 million. This was largely due to a significant increase in Sales, General, and Administrative (SG&A) expenses, up 26.6%, driven by strategic hires and increased investment in sales and marketing. Despite the increase in operating expenses, the company maintained a healthy cash position, ending the quarter with $38.6 million in cash and cash equivalents, and initiated a $25 million share repurchase program.

Key Highlights

• 1Net sales increased 18.7% to $30.4 million, driven by strong adoption of new TASER models (X2 and X26P) and growth in the Video segment.
• 2Gross margin improved to 60.6% from 59.4% in the prior year, reflecting sales leverage and operational efficiencies.
• 3Sales, General, and Administrative (SG&A) expenses increased by 26.6% to $11.2 million, primarily due to strategic hires and increased sales/marketing investments.
• 4Operating income decreased by 18.6% to $5.3 million due to the rise in SG&A expenses.
• 5The Video segment showed significant growth, with net sales increasing 175.3% to $2.4 million.
• 6The company ended the quarter with $38.6 million in cash and cash equivalents, an increase from the prior year-end.
• 7A new $25 million share repurchase program was authorized, with approximately $5.4 million repurchased in the first quarter.

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