01—Abstract
Summary
Summary of the 10-Q filed November 8, 2024. Cited figures are marked; the original filing is the authoritative source.
Axon Enterprise, Inc. reported robust revenue growth for the third quarter and first nine months of 2024, with total net sales reaching $544.3 milliona and $1.5 billion respectively.
This represents significant year-over-year increases of 31.7%b and 33.4%, driven by strong performance in both the TASER and Software & Sensors segments. The company saw particular strength in TASER devices and cartridges, alongside continued growth in its cloud-based Axon Evidence and services. Despite the revenue surge, income from operations decreased year-over-year for both periods, primarily due to a substantial increase in operating expenses, notably higher stock-based compensation and R&D investments.
Financially, Axon ended the quarter with a strong liquidity position, holding $695.1 millionc in cash and cash equivalents. The company also reported a significant increase in goodwill and intangible assets, largely due to the acquisition of Fusus, LLC.
Additionally, Axon announced a major acquisition of Dedrone Holdings, Inc. in October 2024, signaling continued strategic expansion. While profitability metrics were impacted by increased expenses, the overall financial health and growth trajectory remain positive, supported by a substantial remaining performance obligation backlog of $7.7 billiond.
02—Key points
Key Highlights
- Net sales increased by 31.7% to $544.3 million in Q3 2024 and by 33.4% to $1.5 billion for the first nine months of 2024, driven by strong performance across both TASER and Software & Sensors segments.
- Income from operations decreased to $24.1 million in Q3 2024 from $57.4 million in the prior year, and to $74.3 million for the first nine months from $114.1 million, primarily due to increased operating expenses.
- Gross margin as a percentage of net sales decreased slightly year-over-year in both Q3 (60.8% vs. 62.1%) and the nine-month period (59.4% vs. 61.2%), mainly attributed to higher stock-based compensation and amortization expenses.
- Operating expenses significantly increased by 57.1% in Q3 and 43.8% year-to-date, driven by higher stock-based compensation, increased headcount, and R&D investments, including transaction costs for acquisitions.
- The company ended Q3 2024 with substantial liquidity, reporting $695.1 million in cash and cash equivalents, a 16.1% increase from year-end 2023.
- Goodwill and intangible assets saw a significant increase, with goodwill rising to $308.5 million from $57.9 million, largely due to the acquisition of Fusus, LLC.
- Axon completed the acquisition of Dedrone Holdings, Inc. in October 2024 for approximately $400 million, further expanding its presence in airspace security.
- Remaining performance obligations totaled $7.7 billion as of September 30, 2024, indicating substantial future contracted revenue.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Axon Enterprise, Inc. kept $0.12.
- Revenue$544.3M100.0%
- Cost of revenue−$213.5M39.2%
- Gross profit$330.7M60.8%
- Operating costs−$306.7M56.3%
- Operating income$24.1M4.4%
- Interest, other & tax$42.9M7.9%
- Net income$67.0M12.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 8, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $544.27M$413.28M | +31.7% |
| Cost of Revenue | $213.53M$156.62M | +36.3% |
| Gross Profit | $330.75M$256.66M | +28.9% |
| R&D Expenses | $114.48M$76.88M | +48.9% |
| SG&A Expenses | $192.19M$122.36M | +57.1% |
| Operating Expenses | $306.67M$199.24M | +53.9% |
| Operating Income | $24.08M$57.42M | −58.1% |
| Net Income | $67.03M$61.31M | +9.3% |
| EPS (Basic) | $0.89$0.82 | +8.5% |
| EPS (Diluted) | $0.86$0.81 | +6.2% |
| Shares Outstanding (Basic) | 75.70M74.83M | +1.2% |
| Shares Outstanding (Diluted) | 78.08M75.95M | +2.8% |
05—Questions
Frequently Asked Questions
What is Axon's revenue performance for the reported period?
Axon reported strong revenue growth. For the three months ended September 30, 2024, net sales were $544.3 million, a 31.7% increase year-over-year. For the nine months ended September 30, 2024, net sales were $1.5 billion, a 33.4% increase year-over-year. This growth was driven by both the TASER and Software & Sensors segments.
Why did Axon's operating income decrease despite strong revenue growth?
The decrease in operating income for both the three and nine-month periods was primarily due to significant increases in operating expenses. These increases were driven by higher stock-based compensation expense (related to new equity awards and increased headcount), increased Research & Development spending, and transaction costs associated with business acquisitions, such as Fusus, LLC.
How has Axon's balance sheet changed, particularly regarding acquisitions?
Axon's balance sheet reflects significant strategic activity. Goodwill increased substantially to $308.5 million from $57.9 million at year-end 2023, largely due to the acquisition of Fusus, LLC. Intangible assets also grew significantly. The company also announced the acquisition of Dedrone Holdings, Inc. in October 2024, which will impact future financial statements.
What is the outlook for future revenue based on remaining performance obligations?
Axon has approximately $7.7 billion in remaining performance obligations as of September 30, 2024. The company expects to recognize between 15% to 25% of this balance over the next 12 months, with the remainder recognized over the following ten years, subject to risks like delayed deployments or contract cancellations.
06—Continue