01—Abstract
Summary
Summary of the 10-Q filed August 6, 2021. Cited figures are marked; the original filing is the authoritative source.
Axon Enterprise, Inc. reported strong top-line growth for the second quarter of 2021, with net sales increasing by 54.9% year-over-year to $218.8 milliona.
This growth was driven by robust performance in both the TASER and Software & Sensors segments, with significant contributions from cartridge sales, the TASER 7 device, and expanded Axon Evidence and cloud services adoption. Despite the substantial revenue increase, the company reported a net loss of $47.1 millionb for the quarter, a wider loss compared to the prior year's $30.8 million.
This was largely due to a significant increase in operating expenses, particularly stock-based compensation, which rose substantially due to updated estimates for performance-based awards. However, the company's financial position remains solid with $266.4 millionc in cash and cash equivalents and a strong overall contracted revenue backlog of $2.04 billion, indicating positive future revenue potential.
02—Key points
Key Highlights
- Net sales surged by 54.9% year-over-year to $218.8 million, driven by strong demand across both TASER ($112.5M) and Software & Sensors ($106.3M) segments.
- TASER segment sales grew 59.6%, with significant increases in cartridge revenue (up 96.4%) and TASER 7 device sales (up 142.7%), indicating strong product adoption and replacement cycles.
- Software & Sensors segment sales increased 50.2%, fueled by the continued expansion of Axon Evidence and cloud services (up 44.1%) and robust sales of Axon Body cameras.
- Gross margin improved to 63.0% from 62.4% year-over-year, with notable margin expansion in the TASER segment (66.4% vs. 61.4%), reflecting manufacturing efficiencies and product mix.
- Operating expenses more than doubled, increasing to $231.6 million from $101.9 million, primarily due to a significant increase in stock-based compensation expenses related to performance awards.
- The company reported a net loss of $47.1 million for the quarter, compared to a net loss of $30.8 million in the prior year, despite strong revenue growth.
- Future contracted revenue stands at approximately $2.04 billion, providing strong visibility for future revenue recognition over the next five to seven years.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2021, Axon Enterprise, Inc. lost $0.22.
- Revenue$218.8M100.0%
- Cost of revenue−$80.9M37.0%
- Gross profit$137.9M63.0%
- Operating costs−$231.6M105.9%
- Operating income−$93.7M42.8%
- Interest, other & tax$46.6M21.3%
- Net income−$47.1M21.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2021filed August 6, 2021Financial Statements
Q2 FY2021 against Q2 FY2020
| Line item | Q2 FY2021Q2 FY2020 | Change |
|---|---|---|
| Revenue | $218.79M$141.26M | +54.9% |
| Cost of Revenue | $80.87M$53.08M | +52.3% |
| Gross Profit | $137.93M$88.18M | +56.4% |
| R&D Expenses | $53.95M$29.56M | +82.5% |
| SG&A Expenses | $177.66M$72.29M | +145.8% |
| Operating Expenses | $231.61M$101.85M | +127.4% |
| Operating Income | -$93.69M-$13.68M | −585.0% |
| Net Income | -$47.12M-$30.76M | −53.2% |
| EPS (Basic) | $-0.72$-0.51 | −41.2% |
| EPS (Diluted) | $-0.72$-0.51 | −41.2% |
| Shares Outstanding (Basic) | 65.17M60.35M | +8.0% |
| Shares Outstanding (Diluted) | 65.17M60.35M | +8.0% |
05—Questions
Frequently Asked Questions
What drove the significant increase in net sales?
Net sales increased by 54.9% to $218.8 million, driven by strong demand for both product lines. Key contributors included a substantial rise in cartridge sales and TASER 7 device sales within the TASER segment, and continued growth in Axon Evidence and cloud services, alongside increased Axon Body camera sales in the Software & Sensors segment.
Why did the company report a wider net loss despite higher sales?
The net loss widened to $47.1 million from $30.8 million primarily due to a significant increase in operating expenses. Specifically, stock-based compensation expense saw a substantial rise, impacting profitability despite the strong revenue performance. This increase was attributed to updated estimates related to performance-based stock awards.
What is the outlook for future revenue, given the large amount of contracted revenue?
The company reported approximately $2.04 billion in future contracted revenue as of June 30, 2021. Management expects to recognize between 20% to 25% of this balance over the next twelve months, with the remainder recognized over the following five to seven years. This indicates a strong revenue pipeline and visibility, though subject to risks like delayed deployments and contract cancellations.
How is the company managing its inventory and supply chain amidst potential disruptions?
The company is actively monitoring its supply chain and managing raw material costs through supplier negotiations and strategic purchasing of non-expiring materials. They are also bolstering strategic supplier relationships, identifying secondary sources, and building inventory buffers to mitigate potential impacts and maintain predictable gross margins.
06—Continue