10-QPeriod: Q1 FY2021

AXON ENTERPRISE, INC. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 7, 2021For Securities:AXON

Summary

Axon Enterprise, Inc. (AXON) reported its first-quarter 2021 financial results, showing significant top-line growth driven by strong performance in both its TASER and Software and Sensors segments. Total net sales increased by 32.5% year-over-year to $195.0 million. The Software and Sensors segment, in particular, saw a 34.7% increase in net sales, highlighting the growing adoption of its cloud-based solutions and connected devices. Despite robust revenue growth, the company reported a net loss of $47.9 million for the quarter, a significant shift from a net income of $4.1 million in the prior year. This was largely driven by a substantial increase in operating expenses, primarily due to higher stock-based compensation expenses related to performance awards and increased investments in research and development and sales, general, and administrative functions to support future growth. The company maintains a strong liquidity position with $154.8 million in cash and cash equivalents and a clear outlook for the full year with projected revenues between $780 million and $820 million.

Financial Highlights

49 data points
Beta

Revenue

$195.02M

63.3% Gross Margin

Net Income

-$47.92M

-24.6% Net Margin

EPS (Diluted)

$-0.75

Total Assets

$1.40B

Cash & Equivalents

$154.93M

Free Cash Flow

$50.42M

Financial Statements
Beta
Revenue$195.02M
Cost of Revenue$71.67M
Gross Profit$123.35M
R&D Expenses$47.02M
SG&A Expenses$126.60M
Operating Expenses$173.62M
Operating Income-$50.26M
Net Income-$47.92M
EPS (Basic)$-0.75
EPS (Diluted)$-0.75
Shares Outstanding (Basic)64.04M
Shares Outstanding (Diluted)64.04M

Key Highlights

  • 1Total net sales grew 32.5% year-over-year to $195.0 million, driven by strong demand across both TASER and Software & Sensors segments.
  • 2The Software and Sensors segment showed robust growth of 34.7%, indicating continued expansion of cloud services and connected devices.
  • 3TASER segment sales increased by 30.4%, fueled by strong demand for the TASER 7 device and associated cartridges.
  • 4The company reported a net loss of $47.9 million, a significant decrease from a net income of $4.1 million in the prior year's quarter.
  • 5Operating expenses surged by 94.2% ($84.2 million) year-over-year, primarily due to a substantial increase in stock-based compensation expenses ($61.9 million) and higher R&D and SG&A investments.
  • 6The company maintains a solid financial position with $154.8 million in cash and cash equivalents and no long-term debt.
  • 7Axon provided an optimistic revenue outlook for the full year 2021, expecting revenues to be in the range of $780 million to $820 million.

Frequently Asked Questions

The substantial increase in operating expenses, particularly Sales, General, and Administrative (SG&A) expenses, was primarily driven by a significant rise in stock-based compensation. This increase is largely attributed to updated estimates and probable attainment of performance criteria for the CEO Performance Award and the eXponential Stock Performance Plan (XSPP). Additionally, increased headcount and investments in R&D and marketing also contributed to the higher operating costs.

While revenue grew significantly (32.5%), the company recorded a net loss of $47.9 million due to a substantial increase in operating expenses. The surge in stock-based compensation, combined with increased investments in research and development and SG&A to support future growth initiatives, outweighed the revenue gains. These investments are strategically aimed at expanding the Software and Sensors segment and developing new products.

Axon Enterprise, Inc. anticipates continued strong performance in 2021, projecting full-year revenue to be in the range of $780 million to $820 million. Capital expenditure expectations remain unchanged, indicating a focus on strategic investments to support ongoing growth and product development.

The company maintains a healthy liquidity position with $154.8 million in cash and cash equivalents as of March 31, 2021. It also has access to a $50.0 million unsecured revolving line of credit, of which $43.9 million was available for borrowing. Axon has no long-term debt and believes its current funding sources, combined with potential additional financing, will be sufficient to meet its cash requirements for at least the next 12 months, including capital expenditures, working capital, and potential acquisitions.