01—Abstract
Summary
Summary of the 10-Q filed November 9, 2022. Cited figures are marked; the original filing is the authoritative source.
Axon Enterprise, Inc. reported strong revenue growth in the third quarter of 2022, with net sales increasing by 34.4% year-over-year to $311.8 milliona.
This growth was primarily driven by the Software and Sensors segment, which saw a 51.0% increase in net sales, and continued strength in the TASER segment, particularly with the TASER 7 device. The company also achieved significant year-over-year improvement in profitability, with income from operations rising substantially to $32.1 millionb from $2.9 million in the prior year quarter. This profitability surge was aided by a significant decrease in stock-based compensation expense.
For the nine-month period ended September 30, 2022, net sales grew by 32.2% to $853.8 millionc, and the company transitioned from a net loss of $46.5 million in the prior year to a net income of $118.0 million. A substantial portion of this improvement is attributable to a significant decrease in stock-based compensation expense. The company ended the quarter with a healthy liquidity position, characterized by $147.7 million in cash and cash equivalents and a strong backlog of future contracted revenue amounting to $3.73 billion, providing good visibility into future revenue streams.
02—Key points
Key Highlights
- Net sales for Q3 2022 increased by 34.4% to $311.8 million, driven by both TASER and Software & Sensors segments.
- Software and Sensors segment sales surged 51.0% year-over-year, highlighting continued growth in cloud services and integrated solutions.
- Income from operations dramatically improved, reaching $32.1 million in Q3 2022, compared to $2.9 million in Q3 2021.
- The nine-month period ended September 30, 2022, saw a significant swing to profitability, with net income of $118.0 million, compared to a net loss of $46.5 million in the prior year.
- Gross margins remained strong, with the overall company gross margin at 62.0% for Q3 2022.
- Future contracted revenue stands at a substantial $3.73 billion as of September 30, 2022, indicating strong revenue visibility.
- Cash and cash equivalents were $147.7 million at the end of the quarter, with no outstanding borrowings on the company's credit facility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2022, Axon Enterprise, Inc. kept $0.04.
- Revenue$311.8M100.0%
- Cost of revenue−$118.5M38.0%
- Gross profit$193.3M62.0%
- Operating costs−$161.2M51.7%
- Operating income$32.1M10.3%
- Interest, other & tax−$20.0M6.4%
- Net income$12.1M3.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed November 9, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $311.75M$231.99M | +34.4% |
| Cost of Revenue | $118.50M$87.42M | +35.5% |
| Gross Profit | $193.26M$144.57M | +33.7% |
| R&D Expenses | $59.13M$42.38M | +39.5% |
| SG&A Expenses | $102.02M$99.30M | +2.7% |
| Operating Expenses | $161.15M$141.68M | +13.7% |
| Operating Income | $32.11M$2.89M | +1011.0% |
| Net Income | $12.13M$48.52M | −75.0% |
| EPS (Basic) | $0.17$0.73 | −76.7% |
| EPS (Diluted) | $0.17$0.67 | −74.6% |
| Shares Outstanding (Basic) | 71.11M66.19M | +7.4% |
| Shares Outstanding (Diluted) | 72.53M72.44M | +0.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Axon's revenue growth in Q3 2022?
The primary driver of Axon's revenue growth in Q3 2022 was the strong performance of its Software and Sensors segment, which saw a 51.0% increase in net sales year-over-year. The TASER segment also contributed positively, with growth led by the TASER 7 device and increased cartridge sales.
How did Axon's profitability change compared to the prior year?
Axon experienced a significant improvement in profitability. For the third quarter of 2022, income from operations increased to $32.1 million from $2.9 million in the prior year. The nine-month period also showed a substantial turnaround, moving from a net loss of $46.5 million to a net income of $118.0 million, largely influenced by a decrease in stock-based compensation expenses.
What is the outlook for future revenue based on the company's backlog?
Axon reported approximately $3.73 billion in future contracted revenue as of September 30, 2022. The company expects to recognize between 15% - 20% of this balance over the next twelve months, with the remainder recognized over the following ten years, subject to certain contractual risks.
Does Axon have any significant debt obligations?
As of September 30, 2022, Axon Enterprise, Inc. had no outstanding borrowings under its $50.0 million revolving credit facility, though it had $6.5 million in outstanding letters of credit. The company reported no long-term debt on its balance sheet.
06—Continue