8-KOther Events

AXON ENTERPRISE, INC. 8-K Report, Corporate Update (Jun 21, 2018)

Filed June 21, 2018For Securities:AXON

Summary

This 8-K filing from Axon Enterprise, Inc. (AXON) provides updated financial information subsequent to their Q1 2018 filing, with a focus on share count, CEO compensation, and historical Non-GAAP financial data. Notably, Axon had 58,244,665 shares outstanding as of May 21, 2018, post-equity offering. A new performance-based equity award for the CEO was approved, expected to result in approximately $3.0 million in stock-based compensation expense for 2018, recognized ratably from May 24, 2018. The filing also presents detailed reconciliations of GAAP to Non-GAAP Net Income and EPS for the past five quarters, highlighting the impact of stock-based compensation and other discrete items. This data is provided to aid investors in comparing historical performance. The company also disclosed expected non-recurring acquisition and integration costs of $1.0 million to $1.3 million for the VIEVU acquisition in Q2 2018, while reaffirming its previously issued annual guidance.

Key Highlights

  • 1As of May 21, 2018, Axon had 58,244,665 shares issued and outstanding, reflecting its recent follow-on equity offering.
  • 2A new 10-year performance-based stock award for the CEO was approved, expected to incur ~$3.0 million in stock-based compensation expense during 2018.
  • 3The company is providing a five-quarter reconciliation from GAAP to Non-GAAP Net Income and EPS, emphasizing stock-based compensation and other one-time items.
  • 4Non-GAAP Net Income consistently exceeded GAAP Net Income across the presented periods due to significant stock-based compensation expenses.
  • 5Adjusted EBITDA showed strong growth, increasing from $4,128k in Q2 2017 to $21,329k in Q1 2018, with Adjusted EBITDA margin also improving.
  • 6Axon anticipates incurring $1.0 million to $1.3 million in acquisition and integration costs related to the VIEVU acquisition in Q2 2018.
  • 7The company reaffirms its annual guidance previously issued on May 8, 2018, stating this supplemental information does not alter it.

Frequently Asked Questions

The CEO's new award is 100% tied to market capitalization and operational goals over 10 years, replacing a typical salary and bonus. For 2018, it's expected to generate approximately $3.0 million in stock-based compensation expense, recognized ratably from May 24th through year-end. This will impact GAAP net income but is excluded from Non-GAAP measures.

Axon is providing these reconciliations for the past five quarters to help investors and analysts compare historical performance. The company began presenting Non-GAAP net income in February 2018 and believes these measures, which exclude non-cash stock-based compensation and certain discrete items, offer a clearer view of ongoing operational performance.

No, Axon states that the expected $1.0 million to $1.3 million in acquisition and integration costs for VIEVU in Q2 2018 are non-recurring and do not change the company's previously issued annual guidance from May 8, 2018. The guidance already excluded such transaction and integration costs, as well as stock-based compensation.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a measure of operating profitability. Adjusted EBITDA further excludes non-cash stock-based compensation expense and certain other specific items like gains/losses on asset disposals, providing a metric that management uses to assess operational performance and compare across periods, removing the impact of these non-operational or non-cash items.