Summary
Axon Enterprise, Inc. (AXON) reported a solid increase in net sales for the first quarter of 2020, reaching $147.2 million, a 27.1% increase year-over-year, driven by strong performance in both the TASER and Software & Sensors segments. Despite this top-line growth, the company experienced a net loss from operations of $0.8 million, a shift from income in the prior year, attributed to increased operating expenses, particularly in sales, general, and administrative (SG&A) functions, including a significant rise in stock-based compensation expense and litigation costs. Net income for the quarter was $4.1 million. The company highlighted its proactive measures and strong liquidity position in response to the COVID-19 pandemic, including operational adjustments and supply chain resilience, while noting potential impacts on customer budgets and collections. The company continues its strategic shift towards a subscription-based model, which is reflected in the growth of recurring Axon Cloud revenue and the increasing backlog of future contracted revenue ($1.27 billion). While inventory levels increased, reflecting preparation for demand, the company maintained a strong cash position of $156.5 million at the end of the quarter. Investors should monitor the impact of increased operating expenses and the ongoing FTC investigation.
Financial Highlights
49 data points| Revenue | $147.16M |
| Cost of Revenue | $58.55M |
| Gross Profit | $88.61M |
| R&D Expenses | $26.38M |
| SG&A Expenses | $63.03M |
| Operating Expenses | $89.41M |
| Operating Income | -$800K |
| Net Income | $4.07M |
| EPS (Basic) | $0.07 |
| EPS (Diluted) | $0.07 |
| Shares Outstanding (Basic) | 59.61M |
| Shares Outstanding (Diluted) | 60.39M |
Key Highlights
- 1Net sales increased by 27.1% to $147.2 million in Q1 2020, driven by growth in both TASER and Software & Sensors segments.
- 2The Software & Sensors segment showed robust growth, with net sales up 41.3%, largely due to increased Axon Evidence and cloud services revenue and new body camera sales.
- 3Gross margin improved to 60.2% from 59.5% in the prior year's quarter, with the Software & Sensors segment gross margin increasing significantly to 60.3% from 53.2%.
- 4Operating expenses rose significantly, particularly SG&A, up 46.9% year-over-year, driven by higher stock-based compensation, increased litigation costs related to the FTC matter, and expanded headcount.
- 5The company reported a net loss from operations of $0.8 million, compared to an income of $2.7 million in the prior year quarter, primarily due to increased operating expenses.
- 6Net income for the quarter was $4.1 million ($0.07 per diluted share), a decrease from $6.4 million ($0.11 per diluted share) in Q1 2019, impacted by higher expenses and an income tax benefit.
- 7Remaining performance obligations totaled approximately $1.27 billion as of March 31, 2020, indicating substantial future contracted revenue, with an expectation to recognize 20-25% within the next twelve months.
- 8Axon is actively managing the impact of COVID-19, implementing safety protocols, ensuring supply chain continuity, and offering support to customers, while noting potential impacts on municipal budgets and cash collections.