Axon Reports Record Q1 2019 Revenue; Raises Full Year Revenue Guidance; Reiterates Timeline for New Product Launches
SCOTTSDALE, Ariz., May 9, 2019 /PRNewswire/ -- Axon (Nasdaq: AAXN), the global leader in public safety technology, today released the following quarterly update letter to shareholders.
-- Record quarterly revenue of $116 million, up 14% year over year
-- GAAP EPS of $0.11 and Non-GAAP EPS of $0.21
-- Adjusted EBITDA of $14 million
-- $329 million of cash and investments, and no debt at quarter end
-- Raising full year revenue guidance to $485 million to $495 million
Dear Shareholders,
We view 2019 as pivotal for Axon and we are pleased to begin the year with strong momentum. This year, we bring to market Axon Body 3, our first camera with LTE live streaming, and launch Axon Records, our first stand-alone software product. It is also the year that we ramp production and sales of the TASER 7, which represents a complete product redesign, the result of seven years of research and development, and connects for the first time to our secure cloud via a dock, just like our body cameras.
We have substantial progress to report on our execution against these initiatives.
Axon Body 3 remains on track to begin shipping in Q3 2019. In April, we achieved a significant milestone -- we successfully demonstrated live-streaming on both of our carrier partners, FirstNet, built with AT&T, and Verizon, and began the carrier certification process.
Axon Records is expected to go live with our launch customer, a major city((1) )police department, later this year. We have successfully demonstrated that officers can write and review a variety of reports in our system, allowing us to finalize our statement of work with the agency. We are also starting a software pilot with a second major police department. Axon's entry into the records management software market will be groundbreaking because our leadership in body cameras allows us to make body camera video the heart of the incident record.
Finally, we have made steady improvements in our TASER 7 production yields. Q1 2019 TASER segment gross margins do not reflect the yield improvements because of our strategic decision to offer pro-rated trade-in credits based on the remaining useful life of customers' existing devices. We have been pleasantly surprised to see the level of interest in TASER 7 from customers with legacy weapons that are still relatively new. Migrating these customers to the TASER 7 program sooner allows us to capture a higher customer lifetime value, though it does cause ASP compression in the short term.
Total company gross margin is expected to expand throughout 2019 as we continue to improve TASER 7 yields and realize cost improvements on TASER 7 cartridge parts. Gross margin is also expected to benefit from natural trends in our business, including our growing software revenue mix, the amortization of TASER 7 live cartridge revenue, and the phasing out of TASER trade-in credits. We have conviction that TASER 7 is a game changer for law enforcement, and as we look ahead, we believe the gross profit profile on this program will be significant over the next several years.
Customer demand for our products and software continues to be robust. Last week, we hosted our fourth annual Accelerate conference, which has grown from 200 attendees to more than 1,800, becoming the leading technology conference for public safety professionals. The strength of our customer relationships and their excitement about new technologies under development was palpable.
We are building a pipeline of dozens of multi-million dollar, multi-year contracts comprised of our highest value bundles. Importantly, we are seeing increased demand for our highest value TASER 7 contract bundle, which includes user training and unlimited duty cartridges. (See image: Revenue and gross margin by bundle.)
April was an important month for software development that supports our highest value bundles. Two product launches in particular should drive demand for OSP 7+ packages, and will allow us to recognize high margin software revenue.
First, we launched Axon Performance, analytical software that solves the need to ensure that body camera usage consistently complies with agency policy. Today, supervising officers undergo the arduous task of manually reviewing service call logs and comparing them to camera recording logs. Axon Performance automates this process in real time and reports metrics such as officers' body-worn camera activation rates and video categorization rates. Axon Performance also allows supervising officers to review random videos and provide documented feedback to ensure a robust oversight of their program.
Another product launch, Redaction Assistant, is our first advanced AI-powered tool. Solving the redaction challenges of body camera video is important for helping agencies comply with public disclosure laws while also respecting individuals' right to privacy. Compared with manual redaction, Redaction Assistant helps public information officers redact video in less than half the time - using AI assistance in blurring faces, license plates and screens - allowing footage to be shared with the public more quickly and with dramatically lower costs due to task automation.
Also in April, Axon achieved FedRAMP JAB authorization, clearing the way for federal government customers to use Axon Evidence (Evidence.com). Clearing this hurdle involved three years of site reliability engineering, architecture design and information security efforts. Axon Evidence is the first cloud-based digital evidence management system to achieve federal authorization, supporting our efforts to capture this expansive opportunity.
((1) )The Major Cities Chiefs Association includes 69 of the largest urban areas in the United States and the 10 largest cities in Canada.
Summary of Q1 2019 Results
-- Revenue of $116 million represents 14% year over year growth.
-- Gross margin of 59.5% represents 260 basis points of sequential
improvement, driven by strength in software and sensors, partially
offset by TASER 7 program startup costs, including customer trade-in
credits.
-- Operating expenses of $66.2 million reflect continued R&D investment and
SG&A expense discipline.
-- SG&A of $42.9 million grew 2% sequentially.
-- R&D of $23.4 million grew 10% sequentially on increases in headcount
to support software product development.
-- GAAP EPS of $0.11 includes a tax benefit related to the vesting of
employee stock grants; Non-GAAP EPS of $0.21 excludes non-cash
stock-based compensation expenses and also reflects the benefit of a
favorable tax rate.
-- Adjusted EBITDA of $14 million grew 27% or $3 million sequentially,
primarily due to the rationalization of non-recurring expenses
associated with Vievu, which we acquired in May 2018.
-- Axon's strong balance sheet, which includes $329 million in cash and
investments, and zero debt, provides us with the latitude to continue
growing our subscription contracts as a percentage of revenue.
Financial commentary by segment
TASER
Three Months Ended Change
March 31, 2019 December 31, March 31, 2018 QoQ YoY
2018
TASER
---
Net $
65,391 $
65,301 $
63,524 0.1 2.9
sales
% %
Gross
margin 64.4
% 65.0
% 67.7
% -60bp -330bp
-- TASER revenue of $65.3 million, up 3% year over year, includes strength
in legacy product pricing, strong UK sales and a 19% year over year
increase in cartridge sales.
-- The 8,800 TASER 7 units shipped in Q1 2019 represents unit volume on
par with the entire first year of the TASER X2, which we introduced
in 2011.
-- TASER gross margin of 64.4% declined sequentially, largely driven by a
dip in TASER 7 ASPs due to customer trade-in credits, combined with
TASER 7 manufacturing yields that have not yet reached maturity. We also
began depreciating TASER 7 production equipment for a full quarter. We
expect TASER segment gross margins to strengthen in the back half.
-- Approximately 42% of all weapons sold in Q1 were on a recurring payment
plan. In the United States, recurring payment plans accounted for 51% of
new TASER contracts, with TASER 7 contracts driving subscriptions.
Software & Sensors
Three Months Ended Change
March 31, 2019 December 31, March 31, 2018 QoQ YoY
2018
Software
and
Sensors
---
Axon Cloud $
27,631 $
25,774 $
20,241 7.2 36.5
net sales
% %
Axon Cloud
gross % % %
margin 73.6 74.5 78.7 -90bp -510bp
Sensors $
22,788 $
23,716 $
17,450 (3.9) 30.6
and Other
net sales % %
Sensors
and Other % % %
gross
margin 28.4 15.7 31.9 1,270bp -350bp
-- Axon Cloud revenue of $27.6 million grew 37% year over year.
-- Axon Cloud gross margin of 73.6% was in line with our expectations.
-- Sensors and Other revenue of $22.8 million grew 31% year over year and
was down sequentially, reflecting typical seasonality and an anticipated
slowdown of Axon Body 2 sales in advance of Axon Body 3 coming to market
in Q3. We expect hardware revenue to strengthen in the back half of 2019
with the commencement of AB3 shipments.
-- Sensors and Other gross margin of 28.4% was up substantially from 15.7%
in Q4 2018, primarily due to the rationalization of one-time expenses
associated with Vievu. As previously discussed, we manage to a 25% gross
margin in sensors hardware, though it may vary quarter to quarter
depending on mix.
Performance Figures
March 31, 2019 December 31, September 30, June 30, 2018 March 31, 2018
2018 2018
Annual
recurring
revenue (1) $
122,276 $
108,496 $
101,618 $
92,711 $
83,310
Cumulative
Axon software
seats booked 371,100 347,200 325,200 305,200 226,900
Software and
Sensors
bookings $
76,391 $
109,779 $
92,895 $
88,860 $
97,528
Total company
future
contracted
revenue $
930,000 $
900,000 $
820,000 $
750,000 $
650,000
(1) Monthly recurring license,
integration, warranty, and
storage revenue annualized.
-- Note that annual recurring revenue of $122 million is driven by only
that portion of Axon's (371,100 cumulative) booked seats that are
online and contributing to revenue. For the first time, annual recurring
revenue includes software and warranty revenue related to TASER 7, which
is our first true subscription-hardware TASER with software
connectivity, a dock and cloud data storage. The strong sequential
growth in ARR primarily reflects strength in domestic body camera and
Axon Fleet software licenses. As we anticipated, the contribution from
TASER 7 was minimal this quarter.
-- For the first time, cumulative Axon booked seats includes TASER 7
software licenses.
-- Software and Sensors bookings of $76 million reflect typical Q1
seasonality, which we did not experience in Q1 2018 due to a substantial
international order. Excluding that single order one year ago, bookings
grew on a year-over-year basis. We anticipate that bookings growth will
strengthen after Axon Body 3 begins shipping in Q3 2019.
-- Total company future contracted revenue of approximately $930 million is
limited to revenue from arrangements that meet the definition of a
contract under Topic 606 as of March 31, 2019. We expect to recognize
between 15% to 20% of this balance over the next 12 months and expect
the remainder to be recognized over the following five to seven years,
subject to risks related to delayed deployments, budget appropriation or
other contract cancellation clauses.
Outlook
For full year 2019, we are providing the following guidance:
-- Raising revenue outlook to $485 million to $495 million, from $480
million to $490 million previously;
-- We continue to expect to deliver significantly higher growth rates
in the second half of 2019, driven by an anticipated acceleration of
TASER 7 shipments and initial Axon Body 3 shipments.
-- Q2 2019 revenue is expected to increase approximately 16% to 17%
year over year;
-- Maintaining Adjusted EBITDA guidance of $80 million to $85 million,
which represents 34% year-over-year growth at the midpoint;
-- Adjusted EBITDA in Q2 2019 is expected to be approximately flat
sequentially and year over year.
-- We expect stock-based compensation expenses to be approximately $35
million for the full year, which is subject to change depending on our
assessment of the probability of attaining operational metrics for the
CEO Performance Award and XSU awards, and the expected timing of such
attainment; and
-- A normalized tax rate of 20% to 25%, which can fluctuate depending on
geography of income and the effects of discrete items, including changes
in our stock price.
We are pleased with our year-to-date execution and look forward to updating you throughout the year.
Signed,
Rick Smith, CEO
Luke Larson, President
Jawad Ahsan, CFO
Quarterly conference call and Webcast
We will host our Q1 2019 earnings conference call on May 9 at 2 p.m. PT / 5 p.m. ET.
The call will be available via live audio webcast and archived replay on Axon's investor relations website at https://investor.axon.com.
Statistical Definitions
Software & Sensors bookings are an indication of the activity the Company is seeing relative to Software & Sensors hardware, software and Axon Evidence. We consider bookings to be a statistical measure defined as the sales price of orders (not invoiced sales), including contractual optional periods we expect to be exercised, net of cancellations, placed in the relevant fiscal period, regardless of when the products or services ultimately will be provided. Most bookings will be invoiced in subsequent periods.
Due to municipal government funding rules, in some cases certain of the future period amounts included in bookings are subject to budget appropriation or other contract cancellation clauses. Although Axon has entered into contracts for the delivery of products and services in the future and anticipates the contracts will be fulfilled, if agencies do not exercise contractual options, do not appropriate money in future year budgets or do enact a cancellation clause, revenue associated with these bookings may not ultimately be recognized, resulting in a future reduction to bookings.
For more information relative to our revenue recognition policies, please reference our SEC filings.
Non-GAAP Measures
To supplement the Company's financial results presented in accordance with GAAP, we present the non-GAAP financial measures of EBITDA, Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Diluted Earnings Per Share and Free Cash Flow. The Company's management uses these non-GAAP financial measures in evaluating the Company's performance in comparison to prior periods. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance, and when planning and forecasting our future periods. A reconciliation of GAAP to the non-GAAP financial measures is presented herein.
-- EBITDA (Most comparable GAAP Measure: Net income) - Earnings before
interest expense, investment interest income, income taxes, depreciation
and amortization.
-- Adjusted EBITDA (Most comparable GAAP Measure: Net income) - Earnings
before interest expense, investment interest income, income taxes,
depreciation, amortization, non-cash stock-based compensation expense
and pre-tax certain other items (described below).
-- Non-GAAP Net Income (Most comparable GAAP Measure: Net income) - Net
income excluding the costs of non-cash stock-based compensation and
excluding pre-tax certain other items, including, but not limited to,
net gain/loss/write-down/disposal/abandonment of property, equipment and
intangible assets; loss on impairment; and costs related to business
acquisitions. The Company tax-effects non-GAAP adjustments using the
blended statutory federal and state tax rates for each period presented.
-- Non-GAAP Diluted Earnings Per Share (Most comparable GAAP Measure:
Earnings Per share) - Measure of Company's Non-GAAP Net Income divided
by the weighted average number of diluted common shares outstanding
during the period presented.
-- Free Cash Flow (Most comparable GAAP Measure: Cash flow from operating
activities) - cash flows provided by operating activities minus
purchases of property and equipment, intangible assets and cash flows
related to business acquisitions.
Caution on Use of Non-GAAP Measures
Although these non-GAAP financial measures are not consistent with GAAP, management believes investors will benefit by referring to these non-GAAP financial measures when assessing the Company's operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:
-- these non-GAAP financial measures are limited in their usefulness and
should be considered only as a supplement to the Company's GAAP
financial measures;
-- these non-GAAP financial measures should not be considered in isolation
from, or as a substitute for, the Company's GAAP financial measures;
-- these non-GAAP financial measures should not be considered to be
superior to the Company's GAAP financial measures; and
-- these non-GAAP financial measures were not prepared in accordance with
GAAP and investors should not assume that the non-GAAP financial
measures presented in this earnings release were prepared under a
comprehensive set of rules or principles.
Further, these non-GAAP financial measures may be unique to the Company, as they may be different from similarly titled non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company's results to the results of other companies.
About Axon
Axon is a network of devices, apps, and people that helps public safety personnel become smarter and safer. With a mission of protecting life, our technologies give customers the confidence, focus and time they need to keep their communities safe. Our products impact every aspect of a public safety officer's day-to-day experience.
We work hard for those who put themselves in harm's way for all of us. To date, there are more than 371,100 software seats booked on the Axon network around the world and more than 216,000 lives and countless dollars have been saved with the Axon network of devices, apps and people. Learn more at www.axon.com or by calling (800) 978-2737.
AT&T is a trademark of AT&T Intellectual Property, Facebook is a trademark of Facebook, Inc., FirstNet is a trademark of the US Department of Commerce, Twitter is a trademark of Twitter, Inc., and Verizon is a trademark of Verizon Trademark Services LLC.
Axon, Axon Body 2, Axon Body 3, Axon Evidence, Axon Fleet, TASER, TASER 7, Vievu, X2, Protect Life and the Delta Logo are trademarks of Axon Enterprise, Inc., some of which are registered in the US and other countries. For more information, visit www.axon.com/legal. All rights reserved.
Follow Axon here:
-- Axon on Twitter: https://twitter.com/axon_us
-- Axon on Facebook: https://www.facebook.com/Axon.ProtectLife/
Forward-looking statements
These forward-looking statements include, without limitation, statements regarding: proposed products and services and related development efforts and activities; expectations about the market for our current and future products and services; expectations about customer behavior; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management's strategies, goals and objectives and other similar expressions; as well as the ultimate resolution of financial statement items requiring critical accounting estimates, including those set forth in our Form 10-K for the year ended December 31, 2018. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as "may," "will," "should," "could," "would," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," and similar expressions, as well as statements in future tense, identify forward-looking statements. However, not all forward-looking statements contain these identifying words.
We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. The following important factors could cause actual results to differ materially from those in the forward-looking statements: customer purchase behavior, including adoption of our software as a service delivery model; delayed cash collections and possible credit losses due to our subscription model; exposure to international operational risks; changes in the costs of product components and labor; defects in our products; the impact of product mix on projected gross margins; our ability to manage our supply chain and avoid production delays, shortages, and impacts to expected gross margins; our ability to design, introduce and sell new products or features; our ability to defend against litigation and protect our intellectual property, and the resulting costs of this activity; our exposure to cancellations of government contracts due to appropriation clauses, exercise of a cancellation clause, or non-exercise of contractually optional periods; loss of customer data, a breach of security or an extended outage, including our reliance on third party cloud-based storage providers; negative media publicity regarding our products; changes in government regulations in the U.S. and in foreign markets, especially related to the classification of our product by the United States Bureau of Alcohol, Tobacco, Firearms and Explosives and to evolving regulations surrounding privacy and data protection; our ability to integrate acquired businesses; our ability to attract and retain key personnel; and counter-party risks relating to cash balances held in excess of FDIC insurance limits. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements. Our Annual Report on Form 10-K lists various important factors that could cause actual results to differ materially from expected and historical results. These factors are intended as cautionary statements for investors within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act. Readers can find them under the heading "Risk Factors" in the Report on Form 10-K and in the Report on Form 10-Q, and investors should refer to them. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports to the SEC.
Please visit https://investor.axon.com, https://www.axon.com/press, www.twitter.com/axon_us and https://www.facebook.com/Axon.ProtectLife/ where Axon discloses information about the company, its financial information, and its business.
For investor relations information please contact Andrea James via email at IR@axon.com.
CONTACT:
Investor Relations
Axon Enterprise, Inc.
IR@axon.com
AXON ENTERPRISE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended
March 31, December 31, March 31,
2019 2018 2018
---
Net sales from products $
88,089 $
89,017 $
80,974
Net sales from services 27,721 25,774 20,241
Net sales 115,810 114,791 101,215
Cost of product sales 39,600 42,863 32,434
Cost of service sales 7,293 6,582 4,320
Cost of sales 46,893 49,445 36,754
Gross margin 68,917 65,346 64,461
Operating expenses:
Sales, general and
administrative 42,892 42,099 35,759
Research and development 23,354 21,254 15,119
Total operating expenses 66,246 63,353 50,878
Income from operations 2,671 1,993 13,583
Interest and other income,
net 2,313 1,021 1,263
Income before provision for
income taxes 4,984 3,014 14,846
Provision for (benefit from)
income taxes (1,435) 931 1,920
Net income $
6,419 $
2,083 $
12,926
Net income per common and common equivalent
shares:
Basic $
0.11 $
0.04 $
0.24
Diluted $
0.11 $
0.03 $
0.24
Weighted average number of common and common
equivalent shares outstanding:
Basic 58,914 58,502 53,119
Diluted 59,751 59,665 54,532
AXON ENTERPRISE, INC.
SEGMENT REPORTING
(Unaudited)
(dollars in thousands)
Three Months Ended March 31, 2019 Three Months Ended December 31, 2018 Three Months Ended March 31, 2018
TASER Software Total TASER Software Total TASER Software Total
and Sensors and Sensors and Sensors
---
Net sales from
products (1) $
65,301 $
22,788 $
88,089 $
65,301 $
23,716 $
89,017 $
63,524 $
17,450 $
80,974
Net sales from
services (2) 90 27,631 27,721 25,774 25,774 20,241 20,241
Net sales 65,391 50,419 115,810 65,301 49,490 114,791 63,524 37,691 101,215
Cost of product
sales 23,278 16,322 39,600 22,874 19,989 42,863 20,543 11,891 32,434
Cost of service
sales - 7,293 7,293 6,582 6,582 4,320 4,320
Cost of sales 23,278 23,615 46,893 22,874 26,571 49,445 20,543 16,211 36,754
Gross margin 42,113 26,804 68,917 42,427 22,919 65,346 42,981 21,480 64,461
Gross margin % 64.4 53.2 59.5 65.0 46.3 56.9 67.7 57.0 63.7
% % % % % % % % %
Research and
development 3,712 19,642 23,354 5,196 16,058 21,254 2,960 12,159 15,119
(1) Software and Sensors
"products" revenue consists of
sensors, including on-officer
body cameras, Axon Fleet
cameras, other hardware sensors,
warranties on sensors, and other
products, and is sometimes
referred to as Sensors and Other
revenue.
(2) Software and Sensors
"services" revenue comprises
sales related to the Axon Cloud,
which includes Axon Evidence,
cloud-based evidence management
software revenue, other
recurring cloud-hosted software
revenue and related professional
services, and is sometimes
referred to as Axon Cloud
revenue. TASER "services"
revenue similarly includes
amounts for Axon Evidence and
related professional services.
AXON ENTERPRISE, INC.
UNIT SALES STATISTICS
(Unaudited)
Units in whole numbers
Three Months Ended March 31,
2019 2018 Unit Percent
Change Change
---
TASER 7 8,835 8,835
*
TASER X26P 14,985 15,720 (735) (4.7)
TASER X2 9,861 20,501 (10,640) (51.9)
TASER Pulse
and Bolt 1,253 4,000 (2,747) (68.7)
Cartridges 616,517 532,952 83,565 15.7
Axon Body 25,848 21,769 4,079 18.7
Axon Flex 3,591 3,693 (102) (2.8)
Axon Fleet 1,735 1,857 (122) (6.6)
Axon Dock 4,994 5,844 (850) (14.5)
TASER Cam 1,741 3,528 (1,787) (50.7)
* Not meaningful
AXON ENTERPRISE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Dollars in thousands
Three Months Ended
March 31, December 31, March 31,
2019 2018 2018
---
EBITDA and Adjusted EBITDA:
---
Net income $
6,419 $
2,083 $
12,926
Depreciation and
amortization 2,800 2,389 2,411
Interest expense 6 33 20
Investment interest income (2,003) (1,076) (75)
Provision for (benefit from)
income taxes (1,435) 931 1,920
EBITDA $
5,787 $
4,360 $
17,202
Adjustments:
Stock-based compensation
expense $
7,905 $
6,577 $
4,093
Loss on disposal and
abandonment of intangible
assets 18 14
Loss on disposal and
impairment of property and
equipment, net 242 13 34
Adjusted EBITDA $
13,952 $
10,964 $
21,329
Net income as a percentage of 5.5 1.8
% 12.8
net sales % %
Adjusted EBITDA as a 12.0 9.6
% 21.1
percentage of net sales % %
Stock-based compensation expense:
Cost of product and service
sales $
226 $
152 $
141
Sales, general and
administrative 4,681 3,927 2,304
Research and development 2,998 2,498 1,648
Total $
7,905 $
6,577 $
4,093
AXON ENTERPRISE, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - continued
(Unaudited)
Dollars in thousands
Three Months Ended
March 31, 2019 December 31, 2018 March 31, 2018
---
Non-GAAP net income:
---
GAAP net income $
6,419 $
2,083 $
12,926
Non-GAAP adjustments:
Stock-based compensation
expense 7,905 6,577 4,093
Loss on disposal and
abandonment of intangible
assets 18 14
Loss on disposal and
impairment of property and
equipment, net 242 13 34
Income tax effects (2,016) (1,737) (1,002)
Income tax benefit of CEO
stock option exercise - (2,321)
Non-GAAP net income $
12,568 $
4,629 $
16,051
Three Months Ended
March 31, 2019 December 31, 2018 March 31, 2018
---
Non-GAAP diluted earnings per share:
---
GAAP diluted earnings per
share $
0.11 $
0.03 $
0.24
Non-GAAP adjustments:
Stock-based compensation
expense 0.13 0.11 0.08
Loss on disposal and
abandonment of intangible
assets 0.00
Loss on disposal and
impairment of property and
equipment, net 0.00 0.00
Income tax effects (0.03) (0.03) (0.02)
Income tax benefit of CEO
stock option exercise - (0.04)
Non-GAAP diluted earnings
per share (1) $
0.21 $
0.08 $
0.29
Weighted average number of
diluted common and common
equivalent shares
outstanding (in thousands) 59,751 59,665 54,532
(1) The per share calculations for
GAAP net income, Non-GAAP
adjustments and Non-GAAP diluted
earnings per share are each
computed independently. Per share
amounts may not sum due to
rounding.
AXON ENTERPRISE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, 2019 December 31, 2018
---
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $
223,642 $
349,462
Short-term investments 105,312
Accounts and notes receivable,
net 149,096 130,579
Contract assets, net 17,945 13,960
Inventory 37,587 33,763
Prepaid expenses and other
current assets 33,340 30,391
Total current assets 566,922 558,155
Property and equipment, net 41,347 37,893
Deferred income tax assets, net 18,770 19,347
Intangible assets, net 15,067 15,935
Goodwill 25,017 24,981
Long-term notes receivable, net
of current portion 36,316 40,230
Other assets 35,756 22,999
Total assets $
739,195 $
719,540
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $
9,865 $
15,164
Accrued liabilities 36,348 41,092
Current portion of deferred
revenue 110,063 107,016
Customer deposits 3,604 2,702
Other current liabilities 3,914 37
Total current liabilities 163,794 166,011
Deferred revenue, net of current
portion 74,784 74,417
Liability for unrecognized tax
benefits 3,156 2,849
Long-term deferred compensation 3,675 3,235
Other long-term liabilities 13,247 5,704
Total liabilities 258,656 252,216
Stockholders' Equity:
Preferred stock -
Common stock 1 1
Additional paid-in capital 460,146 453,400
Treasury stock (155,947) (155,947)
Retained earnings 177,802 171,383
Accumulated other comprehensive
loss (1,463) (1,513)
Total stockholders' equity 480,539 467,324
Total liabilities and
stockholders' equity $
739,195 $
719,540
AXON ENTERPRISE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31, December 31, March 31,
2019 2018 2018
---
Cash flows from operating activities:
Net income $
6,419 $
2,083 $
12,926
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and
amortization 2,800 2,389 2,411
Loss on disposal and
abandonment of
intangible assets 18 1,827
Loss (gain) on
disposal and
impairment of
property and
equipment, net 242 (1,800) 34
Stock-based
compensation 7,905 6,577 4,093
Deferred income
taxes 577 (1,266) 1,514
Unrecognized tax
benefits 307 1,045 104
Other noncash, net 896 22
Change in assets and liabilities:
Accounts and notes
receivable (21,994) (16,471) (17,060)
Inventory (3,936) 5,771 2,408
Prepaid expenses and
other assets (3,152) (658) (1,702)
Accounts payable,
accrued liabilities
and other
liabilities (7,284) 9,200 6,740
Deferred revenue 3,232 22,542 6,554
Net cash provided by
(used in) operating
activities (13,970) 31,239 18,044
Cash flows from investing activities:
Purchases of
investments (105,322) (802)
Proceeds from call /
maturity of
investments - 500 3,167
Purchases of
property and
equipment (5,271) (4,259) (1,063)
Purchases of
intangible assets (162) (98) (34)
Net cash provided by
(used in) investing
activities (110,755) (3,857) 1,268
Cash flows from financing activities:
Proceeds from
options exercised 100 1,044 356
Income and payroll
tax payments for
net-settled stock
awards (1,259) (2,154) (3,777)
Payment of
contingent
consideration for
business
acquisitions - (1,700)
Net cash used in
financing
activities (1,159) (2,810) (3,421)
Effect of exchange
rate changes on
cash and cash
equivalents 67 (393) 469
Net increase
(decrease) in cash
and cash
equivalents (125,817) 24,179 16,360
Cash and cash
equivalents,
beginning of period 351,027 326,848 78,438
Cash and cash
equivalents, end of
period $
225,210 $
351,027 $
94,798
AXON ENTERPRISE, INC.
SUPPLEMENTAL CASH FLOW INFORMATION
(Unaudited)
(in thousands)
Three Months Ended
March 31, 2019 December 31, March 31, 2018
2018
---
Cash and cash
equivalents $
223,642 $
349,462 $
92,330
Restricted cash 1,568 1,565 2,468
Cash, cash
equivalents
and restricted
cash, end of
period $
225,210 $
351,027 $
94,798
Three Months Ended
March 31, 2019 December 31, March 31, 2018
2018
---
Net cash
provided by
(used in)
operating
activities $
(13,970) $
31,239 $
18,044
Purchases of
property and
equipment (5,271) (4,259) (1,063)
Purchases of
intangible
assets (162) (98) (34)
Free cash flow
(deficit), a
non-GAAP
measure $
(19,403) $
26,882 $
16,947
View original content to download multimedia:http://www.prnewswire.com/news-releases/axon-reports-record-q1-2019-revenue-raises-full-year-revenue-guidance-reiterates-timeline-for-new-product-launches-300847433.html
SOURCE Axon
