Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 05, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-16391 | |
Entity Registrant Name | Axon Enterprise, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 86-0741227 | |
Entity Address, Address Line One | 17800 North 85th Street | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85255 | |
City Area Code | 480 | |
Local Phone Number | 991-0797 | |
Title of 12(b) Security | Common Stock, $0.00001 Par Value | |
Trading Symbol | AXON | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 73,885,305 | |
Entity Central Index Key | 0001069183 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 263,414 | $ 353,684 |
Marketable securities | 54,810 | 39,240 |
Short-term investments | 775,129 | 581,769 |
Accounts and notes receivable, net of allowance of $2,029 and $2,176 as of March 31, 2023 and December 31, 2022, respectively | 379,887 | 358,190 |
Contract assets, net | 216,869 | 196,902 |
Inventory | 220,268 | 202,471 |
Prepaid expenses and other current assets | 142,319 | 73,022 |
Total current assets | 2,052,696 | 1,805,278 |
Property and equipment, net | 172,674 | 169,843 |
Deferred tax assets, net | 171,122 | 156,866 |
Intangible assets, net | 11,270 | 12,158 |
Goodwill | 44,982 | 44,983 |
Long-term investments | 31,116 | 156,207 |
Long-term notes receivable, net | 4,467 | 5,210 |
Long-term contract assets, net | 54,886 | 45,170 |
Strategic investments | 296,563 | 296,563 |
Other long-term assets | 168,173 | 159,616 |
Total assets | 3,007,949 | 2,851,894 |
Current liabilities: | ||
Accounts payable | 65,988 | 59,918 |
Accrued liabilities | 120,607 | 155,934 |
Current portion of deferred revenue | 408,061 | 360,037 |
Customer deposits | 13,961 | 20,399 |
Other current liabilities | 7,510 | 6,358 |
Total current liabilities | 616,127 | 602,646 |
Deferred revenue, net of current portion | 250,366 | 248,003 |
Liability for unrecognized tax benefits | 16,198 | 10,745 |
Long-term deferred compensation | 7,983 | 6,285 |
Deferred tax liability, net | 1 | |
Long-term lease liabilities | 35,045 | 37,143 |
Convertible notes, net | 674,724 | 673,967 |
Other long-term liabilities | 4,511 | 4,613 |
Total liabilities | 1,604,954 | 1,583,403 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | ||
Common stock, $0.00001 par value; 200,000,000 shares authorized; 73,874,062 and 71,474,581 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 1 | 1 |
Additional paid-in capital | 1,262,099 | 1,174,594 |
Treasury stock at cost, 20,220,227 shares as of March 31, 2023 and December 31, 2022 | (155,947) | (155,947) |
Retained earnings | 302,161 | 257,022 |
Accumulated other comprehensive loss | (5,319) | (7,179) |
Total stockholders' equity | 1,402,995 | 1,268,491 |
Total liabilities and stockholders' equity | $ 3,007,949 | $ 2,851,894 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance on accounts receivable | $ 2,029 | $ 2,176 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 73,874,062 | 71,474,581 |
Common stock, shares outstanding (in shares) | 73,874,062 | 71,474,581 |
Treasury stock, shares (in shares) | 20,220,227 | 20,220,227 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Net sales | $ 343,043 | $ 256,426 |
Cost of sales | 138,941 | 100,687 |
Gross margin | 204,102 | 155,739 |
Operating expenses: | ||
Sales, general and administrative | 116,567 | 90,129 |
Research and development | 70,927 | 48,416 |
Total operating expenses | 187,494 | 138,545 |
Income from operations | 16,608 | 17,194 |
Interest and other income, net | 25,276 | 55,299 |
Income before provision for income taxes | 41,884 | 72,493 |
Provision for (benefit from) income taxes | (3,255) | 17,622 |
Net income | $ 45,139 | $ 54,871 |
Net income per common and common equivalent shares: | ||
Basic (in dollars per share) | $ 0.62 | $ 0.77 |
Diluted (in dollars per share) | $ 0.61 | $ 0.76 |
Weighted average number of common and common equivalent shares outstanding: | ||
Basic (in shares) | 72,638 | 70,950 |
Diluted (in shares) | 73,880 | 72,349 |
Net income | $ 45,139 | $ 54,871 |
Foreign currency translation adjustments | 1,676 | (1,072) |
Unrealized gain (loss) on available-for-sale investments | 184 | (489) |
Comprehensive income | 46,999 | 53,310 |
Product | ||
Net sales | 219,389 | 176,204 |
Cost of sales | 107,584 | 79,352 |
Service | ||
Net sales | 123,654 | 80,222 |
Cost of sales | $ 31,357 | $ 21,335 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance at Dec. 31, 2021 | $ 1 | $ 1,095,229 | $ (155,947) | $ 109,883 | $ (1,317) | $ 1,047,849 |
Beginning balance (in shares) at Dec. 31, 2021 | 70,896,856 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | (70) | (70) | ||||
Issuance of common stock under employee plans, net | (1,388) | (1,388) | ||||
Issuance of common stock under employee plans, net (in shares) | 99,802 | |||||
Stock-based compensation | 25,088 | 25,088 | ||||
Net income | 54,871 | 54,871 | ||||
Other comprehensive income (loss), net | (1,561) | (1,561) | ||||
Ending balance at Mar. 31, 2022 | $ 1 | 1,118,859 | $ (155,947) | 164,754 | (2,878) | 1,124,789 |
Ending balance (in shares) at Mar. 31, 2022 | 70,996,658 | 20,220,227 | ||||
Beginning balance at Dec. 31, 2022 | $ 1 | 1,174,594 | $ (155,947) | 257,022 | (7,179) | 1,268,491 |
Beginning balance (in shares) at Dec. 31, 2022 | 71,474,581 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | 33,650 | 33,650 | ||||
Issuance of common stock (in shares) | 154,500 | |||||
Issuance of common stock under employee plans, net | (34,841) | (34,841) | ||||
Issuance of common stock under employee plans, net (in shares) | 335,629 | |||||
Stock options exercised | 54,346 | 54,346 | ||||
Stock options exercised (in shares) | 1,901,535 | |||||
Stock-based compensation | 34,350 | 34,350 | ||||
Issuance of common stock for business combination contingent consideration (in shares) | 7,817 | |||||
Net income | 45,139 | 45,139 | ||||
Other comprehensive income (loss), net | 1,860 | 1,860 | ||||
Ending balance at Mar. 31, 2023 | $ 1 | $ 1,262,099 | $ (155,947) | $ 302,161 | $ (5,319) | $ 1,402,995 |
Ending balance (in shares) at Mar. 31, 2023 | 73,874,062 | 20,220,227 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 45,139 | $ 54,871 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,689 | 5,755 |
Amortization of issuance cost | 756 | |
Coupon interest expense | 863 | |
Loss on disposal and abandonment of intangible assets | 10 | 40 |
Loss on disposal and impairment of property, equipment, and other assets, net | 146 | 106 |
Unrealized gains on strategic investments and marketable securities, net | (15,570) | (55,851) |
Stock-based compensation | 34,350 | 25,088 |
Deferred income taxes | (9,660) | 18,029 |
Unrecognized tax benefits | 855 | 1,365 |
Bond amortization | (3,890) | 159 |
Noncash lease expense | 1,395 | 1,556 |
Provision for expected credit losses | 28 | 228 |
Change in assets and liabilities: | ||
Accounts and notes receivable and contract assets | (50,431) | 7,495 |
Inventory | (15,811) | (14,260) |
Prepaid expenses and other assets | (64,348) | (7,074) |
Accounts payable, accrued and other liabilities | (37,043) | (9,580) |
Deferred revenue | 50,199 | 16,037 |
Net cash provided by (used in) operating activities | (56,323) | 43,964 |
Cash flows from investing activities: | ||
Purchases of investments | (145,124) | |
Proceeds from call / maturity of investments | 81,088 | 7,200 |
Purchases of property and equipment | (8,513) | (17,098) |
Proceeds from disposal of property and equipment | 87 | |
Purchases of intangible assets | (125) | (37) |
Strategic investments | (500) | |
Net cash used in investing activities | (72,674) | (10,348) |
Cash flows from financing activities: | ||
Net proceeds from equity offering | 33,650 | (71) |
Proceeds from options exercised | 39,181 | |
Income and payroll tax payments for net-settled stock awards | (34,841) | (1,388) |
Net cash provided by (used in) financing activities | 37,990 | (1,459) |
Effect of exchange rate changes on cash and cash equivalents | 779 | (157) |
Net increase (decrease) in cash and cash equivalents | (90,228) | 32,000 |
Cash and cash equivalents and restricted cash, beginning of period | 355,552 | 356,438 |
Cash and cash equivalents and restricted cash, end of period | $ 265,324 | $ 388,438 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Supplemental - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Supplemental disclosures: | ||
Cash and cash equivalents | $ 263,414 | $ 386,367 |
Restricted cash (Note 1) | 1,910 | 2,071 |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | 265,324 | 388,438 |
Cash paid for income taxes, net of refunds | 20,936 | 334 |
Non-cash transactions | ||
Property and equipment purchases in accounts payable and accrued liabilities | 1,130 | $ 888 |
Receivables from options exercised | $ 15,165 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | Note 1 - Organization and Summary of Significant Accounting Policies Axon Enterprise, Inc. (“Axon”, the “Company”, "we", or "us") is a market-leading provider of law enforcement technology solutions. Our mission is to protect life in service of promoting peace, justice and strong institutions. Our headquarters in Scottsdale, Arizona houses our executive management, sales, marketing, certain engineering, manufacturing, finance and other administrative support functions. Our global software hub is located in Seattle, Washington, and we also have subsidiaries and / or offices located in Australia, Canada, Finland, France, Germany, Hong Kong, India, Italy, the Netherlands, Spain, the United Kingdom, and Vietnam. The accompanying unaudited condensed consolidated financial statements include the accounts of Axon Enterprise, Inc. and our subsidiaries. All material intercompany accounts, transactions, and profits have been eliminated. Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2022, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit loss, ● valuation of goodwill, intangible and long-lived assets, ● valuation of strategic investments, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, and ● recognition and measurement of contingencies and accrued litigation expense. Actual results could differ materially from those estimates. Segment Information Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the "Software and Sensors" segment); and the manufacture and sale of conducted electrical devices ("CEDs"), batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as "Axon Cloud revenue." Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker ("CODM"). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 15. Geographic Information and Major Customers / Suppliers For the three months ended March 31, 2023, no individual country outside the U.S. represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three months ended March 31, 2023, no customer represented more than 10% of total net sales. At March 31, 2023 and December 31, 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the U.S., China, Republic of Korea, Malaysia, Mexico, Sri Lanka, Taiwan, and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have experienced supply chain disruptions relating to materials and port constraints, we have remained focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers. Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock options and unvested restricted stock units. The effects of outstanding stock options, unvested restricted stock units, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire the number of shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended March 31, 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 45,139 $ 54,871 Denominator: Weighted average shares outstanding 72,638 70,950 Dilutive effect of stock-based awards 1,242 1,399 Diluted weighted average shares outstanding 73,880 72,349 Net income per common share: Basic $ 0.62 $ 0.77 Diluted $ 0.61 $ 0.76 Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended March 31, 2023 2022 Stock-based awards 1,469 2,942 2027 Notes 3,017 — 2027 Warrants 3,017 — Total potentially dilutive securities 7,503 2,942 For additional information regarding our convertible senior notes, refer to Note 9. Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Three Months Ended March 31, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (438) (1,434) Warranty expense 2,928 116 Balance, end of period $ 3,301 $ 1,504 Fair Value Measurements and Financial Instruments We use the fair value framework that prioritizes the inputs to valuation techniques for measuring financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: ● Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. ● Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. ● Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about inputs that market participants would use in pricing an asset or liability. We have cash equivalents and investments, which at March 31, 2023 comprised money market funds, commercial paper, corporate bonds, term deposits, U.S. Government bonds, municipal bonds, agency bonds and U.S. Treasury inflation-protected securities certificates of deposit and U.S. Treasury bills. We have an investment in marketable securities, for which c hanges in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income, net. We have strategic investments in eight unconsolidated affiliates as of March 31, 2023. The estimated fair value of the investments was determined based on Level 3 inputs. In determining the estimated fair value of our strategic investments in privately held companies, we utilize observable data available to us as discussed further in Note 6. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at March 31, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the condensed consolidated balance sheet. Restricted Cash Restricted cash balances were $1.9 million as of March 31, 2023 and December 31, 2022, respectively. The balances were primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such circumstances could include, but are not limited to, a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications are not material and had no effect on the reported results of operations. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2023 | |
Revenues. | |
Revenues | Note 2 - Revenues Nature of Products and Services The following tables present our revenues by primary product and service offering (in thousands): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 67,472 $ — $ 67,472 $ 63,164 $ — $ 63,164 Cartridges 46,800 — 46,800 37,825 — 37,825 Axon Evidence and Cloud Services 7,201 118,314 125,515 3,017 79,939 82,956 Extended Warranties 7,670 14,085 21,755 6,679 9,061 15,740 Axon Body Cameras and Accessories — 38,797 38,797 — 38,517 38,517 Axon Fleet Systems — 32,972 32,972 — 13,820 13,820 Other (1) (2) 5,139 4,593 9,732 3,675 729 4,404 Total $ 134,282 $ 208,761 $ 343,043 $ 114,360 $ 142,066 $ 256,426 (1) TASER segment “Other” includes smaller categories, such as VR hardware, weapons training revenue such as revenue associated with our Master Instructor School, and TASER consumer device sales. (2) Software and Sensors segment “Other” includes revenue from items including Signal Sidearm, Interview Room and Axon Air. The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended March 31, 2023 2022 United States $ 290,938 85 % $ 214,214 84 % Other countries 52,105 15 42,212 16 Total $ 343,043 100 % $ 256,426 100 % Contract Balances The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the three months ended March 31, 2023 (in thousands): March 31, 2023 Contract assets, net $ 271,755 Contract liabilities (deferred revenue) 658,427 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 133,707 Contract liabilities (deferred revenue) consisted of the following (in thousands): March 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 13,333 $ 18,198 $ 31,531 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 28,105 15,467 43,572 26,229 15,338 41,567 41,438 33,665 75,103 40,436 32,956 73,392 Hardware: TASER 46,575 16,896 63,471 49,361 12,640 62,001 Software and Sensors 61,554 106,398 167,952 50,426 109,227 159,653 108,129 123,294 231,423 99,787 121,867 221,654 Services: TASER 6,016 9,425 15,441 7,637 9,501 17,138 Software and Sensors 252,478 83,982 336,460 212,177 83,679 295,856 258,494 93,407 351,901 219,814 93,180 312,994 Total $ 408,061 $ 250,366 $ 658,427 $ 360,037 $ 248,003 $ 608,040 March 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 65,924 $ 44,519 $ 110,443 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 342,137 205,847 547,984 288,832 208,244 497,076 Total $ 408,061 $ 250,366 $ 658,427 $ 360,037 $ 248,003 $ 608,040 Remaining Performance Obligations As of March 31, 2023, we had approximately $4.8 billion of remaining performance obligations, which included both recognized contract liabilities as well as amounts that will be invoiced and recognized in future periods. The remaining performance obligations are limited only to arrangements that meet the definition of a contract under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, as of March 31, 2023. We expect to recognize between 15% - 25% of this balance over the next twelve months, and generally expect the remainder to be recognized over the following ten years, subject to risks related to delayed deployments, budget appropriation or other contract cancellation clauses. |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 3 Months Ended |
Mar. 31, 2023 | |
Cash, Cash Equivalents and Investments | |
Cash, Cash Equivalents and Investments | Note 3 - Cash, Cash Equivalents and Investments The following tables summarize our cash, cash equivalents, marketable securities, and available-for-sale investments at March 31, 2023 and December 31, 2022 (in thousands): As of March 31, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 213,446 $ — $ — $ 213,446 $ 213,446 $ — $ — $ — Level 1: Money market funds 49,968 — — 49,968 49,968 — — — Agency bonds 160,615 39 (230) 160,424 — — 154,688 5,736 Treasury bills 41,079 6 (2) 41,083 — — 41,083 — Marketable securities 90,000 — (35,190) 54,810 — 54,810 — — Subtotal 341,662 45 (35,422) 306,285 49,968 54,810 195,771 5,736 Level 2: State and municipal obligations 3,026 — (14) 3,012 — — 3,012 — Term deposits 175,000 — — 175,000 — — 175,000 — Corporate bonds 241,401 45 (1,081) 240,365 — — 226,468 13,897 U.S. government 43,948 — (158) 43,790 — — 32,307 11,483 Treasury inflation-protected securities 2,525 17 — 2,542 — — 2,542 — Commercial paper 140,029 — — 140,029 — — 140,029 — Subtotal 605,929 62 (1,253) 604,738 — — 579,358 25,380 Total $ 1,161,037 $ 107 $ (36,675) $ 1,124,469 $ 263,414 $ 54,810 $ 775,129 $ 31,116 As of March 31, 2023, we had $375.6 million of available-for-sale investments with unrealized losses. Of the $375.6 million of available-for-sale investments with unrealized losses, $17.6 million have been in a continuous unrealized loss position for 12 months or longer, with total gross unrealized losses of $0.6 million. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. During the year ended December 31, 2021, we acquired 9,000,000 shares of common stock of Cellebrite DI Ltd (“CLBT”) with a fair value of $90.0 million. The CLBT common stock is recorded as marketable securities in the accompanying condensed consolidated balance sheets and its fair value is adjusted every reporting period. Changes in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income, net. During the three months ended March 31, 2023, we recorded an unrealized gain on marketable securities of $15.6 million relating to CLBT. As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. Government 30,525 — (159) 30,366 — — 30,366 — Treasury inflation-protected securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207 |
Expected Credit Losses
Expected Credit Losses | 3 Months Ended |
Mar. 31, 2023 | |
Expected Credit Losses | |
Expected Credit Losses | Note 4 - Expected Credit Losses We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable, notes receivable, and contract assets is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Our monitoring activities include account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. The following table provides a roll-forward of the allowance for expected credit losses that is deducted from the amortized cost basis of accounts receivable, notes receivable, and contract assets to present the net amount expected to be collected (in thousands): Three Months Ended March 31, 2023 United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 Provision for expected credit losses (76) 104 28 Amounts written off charged against the allowance (353) (5) (358) Balance, end of period $ 2,635 $ 665 $ 3,300 March 31, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,029 $ 2,176 Contract assets, net 1,211 1,360 Long-term notes receivable, net of current portion 60 94 Total allowance for expected credit losses on customer receivables $ 3,300 $ 3,630 |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2023 | |
Inventory | |
Inventory | Note 5 - Inventory Inventories are stated at the lower of cost, determined on the first-in, first-out (“FIFO”) basis, or net realizable value, net of an inventory valuation allowance. We use a standard cost methodology to determine the cost basis for its inventories. Costs include allocations for materials, labor, and overhead. All variances between actual costs and standard costs are apportioned to inventory and cost of goods sold based upon inventory turnover. We evaluate inventory on a quarterly basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Additional provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. Inventory consisted of the following at March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Raw materials $ 86,607 $ 72,740 Finished goods 133,661 129,731 Total inventory $ 220,268 $ 202,471 |
Strategic Investments
Strategic Investments | 3 Months Ended |
Mar. 31, 2023 | |
Strategic Investments | |
Strategic Investments | Note 6 - Strategic Investments Strategic investments include investments in a number of non-public technology-driven companies. We account for strategic investments under the ASC 321 measurement alternative for equity securities without readily determinable fair values, as there are no quoted market prices for the investments. The investments are measured at cost less impairment, adjusted for observable price changes and are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In conjunction with certain of our strategic investments, we have the ability to commit additional capital over time through warrants and call options; for some investments, the exercisability and exercise prices are conditional on the achievement of certain performance metrics. The following tables provide a roll-forward of the balance of strategic investments (in thousands): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 $ 83,520 Investments — — — — 500 — 500 Observable price changes: Unrealized gains — — — — 41,893 28,539 70,432 Unrealized losses — — — — — — — Exercises — — — — — — — Sales — — — — — — — Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 123,168 $ 31,284 $ 154,452 Inception to date Strategic investments Warrants Call options Total Investments $ 109,482 $ 3,047 $ 17,233 $ 129,762 Observable price changes: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses (1,108) (377) — (1,485) Exercises 96,719 (30,089) — 66,630 Sales (14,546) — — (14,546) Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 As part of our strategy, we continuously evaluate opportunities for strategic investments that align with our mission. Examples of investment areas include real-time crime center software, drones and related software, biometric sensors, and weapon detection solutions. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2023 | |
Variable Interest Entities | |
Variable Interest Entities | Note 7 - Variable Interest Entities We evaluate our investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If we conclude that an investee is a VIE, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a VIE, we consolidate such entity and reflects the non-controlling interest of other beneficiaries of that entity. ● The VIE’s purpose, design, and risks the VIE was designed to create and pass through to its variable interest holders; ● The VIE’s capital structure; ● The terms between the VIE and its variable interest holders and other parties involved with the VIE; and ● Related-party affiliations. The table below presents a summary of the nonconsolidated VIEs in which we hold variable interests: March 31, 2023 December 31, 2022 Total nonconsolidated variable interest entities: Carrying value of variable interest - assets $ 11,530 $ 11,530 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 11,530 11,530 Total $ 11,530 $ 11,530 (1) In the table above: ● The nature of our variable interest is described in the row under maximum exposure to loss. ● Our exposure to the obligations of the VIE is limited to our interest in the entity. The primary purpose of our U.S-based, nonconsolidated VIE investments is to create strategic partnerships with market-leading providers of law enforcement technology solutions. We present all variable interests in unconsolidated VIEs as strategic investments within the long-term assets section of the condensed consolidated balance sheet. We have provided financial support to the nonconsolidated VIEs in exchange for preferred equity as well as warrants and call options that give us the ability to commit additional capital overtime. Financial support provided to the nonconsolidated VIEs is used to continue to finance their operations. We have no explicit or implicit arrangements to provide additional financial support to the VIEs and we have no liabilities to the VIEs as of March 31, 2023 and December 31, 2022. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Liabilities | |
Accrued Liabilities | Note 8 - Accrued Liabilities Accrued liabilities consisted of the following at March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Accrued salaries, benefits and bonus $ 63,975 $ 97,882 Accrued professional, consulting and lobbying fees 6,840 3,861 Accrued warranty expense 3,301 811 Accrued income and other taxes 7,486 13,559 Accrued inventory in transit 11,318 10,548 Other accrued expenses 27,687 29,273 Accrued liabilities $ 120,607 $ 155,934 |
Convertible Senior Notes
Convertible Senior Notes | 3 Months Ended |
Mar. 31, 2023 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 9 – Convertible Senior Notes 2027 Notes If we undergo a fundamental change (as defined in the indenture governing the Notes), holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, but excluding the fundamental change repurchase date. In addition, following certain corporate events or if we issue a notice of redemption, it will increase the conversion rate for holders who elect to convert their notes in connection with such corporate event or during the relevant redemption period. March 31, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (15,276) (16,033) Convertible notes carrying amount, net $ 674,724 $ 673,967 We consider the fair value of the Notes to be a Level 2 measurement. The estimated fair value of the Notes at March 31, 2023 and December 31, 2022 is based on the closing trading price per $1,000 of the Notes as of the last day of trading for each period as follows (in millions): March 31, 2023 December 31, 2022 2027 Notes $ 812.3 $ 687.3 March 31, 2023 December 31, 2022 Contractual interest expense $ 863 $ 211 Amortization of debt issuance costs 756 198 Total interest expense $ 1,619 $ 409 Note Hedge To reduce the impact of potential economic dilution upon conversion of the Notes, we entered into a convertible note hedge transaction (the “Note Hedge” or “2027 Note Hedge”) with certain investment banks, with respect to our common stock, concurrently with the issuance of the 2027 Notes. Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 The Note Hedge covers shares of our common stock at a strike price per share that corresponds to the initial conversion price of the respective Notes, subject to adjustment, and are exercisable upon conversion of the Notes. If exercised, we may elect to receive cash, shares of our common stock, or a combination of cash and shares. We have accounted for the aggregate amount of purchase price for the Note Hedge as a reduction to additional paid-in capital. The Note Hedge will expire upon the maturity of the Notes. The Note Hedge is intended to reduce the potential economic dilution upon conversion of the Notes in the event that the fair value per share of our common stock at the time of exercise is greater than the conversion price of the Notes. The Note Hedge is a separate transaction and is not part of the terms of the Notes. Holders of the Notes do not have any rights with respect to the Note Hedge. The Note Hedge does not impact earnings per share, as it was entered into to offset any dilution from the Notes. As of March 31, 2023, 3,016,680 shares remain subject to the Note Hedge. Note Warrants Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028 Separately, we entered into warrant transactions with certain investment banks, whereby we sold warrants to acquire, subject to adjustment, the number of shares of our common stock shown in the table above. If the average market value per share of our common stock, on each expiration date exceeds the strike price of the Warrants expiring on that day, such Warrants would have a dilutive effect on our earnings per share to the extent we report net income. According to the terms of the Warrants, the Warrants will be automatically exercised over a 60 -trading day period beginning on the first expiration date as set forth above. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | Note 10 - Income Taxes We file income tax returns for federal purposes and in many states, as well as in multiple foreign jurisdictions. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three to four years, but can be up to ten years in some jurisdictions following the tax year to which these filings relate. Deferred Tax Assets Net deferred income tax assets at March 31, 2023, primarily include R&D capitalization net of amortization, deferred revenue, convertible debt net of amortization, accruals and reserves, and stock-based compensation expense partially offset by accelerated depreciation expense, unrealized investment gains, and valuation allowance reserve. Our total net deferred tax assets at March 31, 2023 were $171.1 million. In preparing our condensed consolidated financial statements, management assesses the likelihood that its deferred tax assets will be realized from future taxable income. In evaluating our ability to recover our deferred income tax assets, management considers all available positive and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction by jurisdiction basis. A valuation allowance is established if it is determined that it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Management exercises significant judgment in determining our provision for income taxes, our deferred tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets. As of March 31, 2023, management continues to believe the positive evidence from projected future earnings outweighs the negative evidence and a valuation allowance is only needed on specific deferred tax assets. We have concluded that a valuation allowance is necessary against unrealized investment losses as well as transaction costs incurred in connection with certain investments. Additionally, we do have Arizona R&D tax credits expiring unutilized each year; therefore, management has concluded that it is more likely than not that our Arizona R&D deferred tax asset will not be realized, and a valuation allowance has been recorded against this net asset. In Australia, we have determined that sufficient deferred tax liabilities will reverse in order to realize all assets except one long-lived intangible where there is not an expectation that the asset may be realized. Therefore, we continue to recognize a partial valuation allowance for Australia. We complete R&D tax credit studies for each year that an R&D tax credit is claimed for federal and state income tax purposes. Management has made the determination that it is more likely than not that the full benefit of the R&D tax credit will not be sustained on examination and recorded a liability for unrecognized tax benefits of $22.3 million as of March 31, 2023. Should the unrecognized benefit of $22.3 million be recognized, our effective tax rate would be favorably impacted. Approximately $5.0 million of the unrecognized tax benefit associated with R&D credits has been netted against the R&D deferred tax asset. Effective Tax Rate Our overall effective tax rate for the three months ended March 31, 2023, after discrete period adjustments, was -7.8%. Before discrete adjustments, the tax rate was 22.8%, which differs from the federal statutory rate, primarily due to the impact of R&D tax credits and a decrease in valuation allowance offset by the executive compensation limitation under Internal Revenue Code ("IRC") Section 162(m) and an increase in unrecognized tax benefits, on projected pre-tax income for the year. The effective tax rate was favorably impacted by a $13.0 million discrete tax benefit primarily associated with net windfalls related to stock-based compensation for restricted stock units (“RSUs”) and performance stock units (“PSUs”) that vested and stock options that were exercised during the three months ended March 31, 2023, primarily attributed to the vesting of tranche 10 of the XSPP in March 2023. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | Note 11 - Stockholders’ Equity CEO Performance Award On May 24, 2018, our stockholders approved the Board of Directors’ grant of 6,365,856 stock option awards to Patrick W. Smith, our CEO (the “CEO Performance Award”). The CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational goals (performance conditions) and market capitalization goals (market conditions), assuming continued employment either as the CEO or as both Executive Chairman and Chief Product Officer and service through each attainment date. Each of the 12 vesting tranches of the CEO Performance Award have a 10-year contractual term and will vest upon certification by the Compensation Committee of the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of the following eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA have been met for the previous four consecutive fiscal quarters. Adjusted EBITDA for purposes of the CEO Performance Award is defined as net income (loss) attributable to common stockholders before interest expense, interest and other income (such as dividends) earned on investments in marketable securities, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation expense. Revenue Goal (1) (in thousands) Achievement Status Adjusted EBITDA (in thousands) Achievement Status Goal #1, $710,058 Achieved Goal #1, $125,000 Achieved Goal #2, $860,058 Achieved Goal #2, $155,000 Achieved Goal #3, $1,010,058 Achieved Goal #3, $175,000 Achieved Goal #4, $1,210,058 Achieved Goal #4, $190,000 Achieved Goal #5, $1,410,058 Not Applicable Goal #5, $200,000 Achieved Goal #6, $1,610,058 Not Applicable Goal #6, $210,000 Achieved Goal #7, $1,810,058 Not Applicable Goal #7, $220,000 Achieved Goal #8, $2,010,058 Not Applicable Goal #8, $230,000 Achieved (1) In connection with the business acquisition that was completed during the three months ended September 30, 2018, the revenue goals were adjusted for the acquiree’s Target Revenue, as defined in the CEO Performance Award agreement. Stock-based compensation expense associated with the CEO Performance Award is recognized over the longer of the expected achievement period for each pair of market capitalization and operational goals, beginning at the point in time when the relevant operational goal is considered probable of being met. The probability of meeting an operational goal and the expected achievement point in time for meeting a probable operational goal are based on a subjective assessment of our forward-looking financial projections, taking into consideration statistical analysis. Even though no tranches of the CEO Performance Award vest unless a market capitalization and a matching operational goal are both achieved, stock-based compensation expense is recognized when an operational goal is considered probable of achievement regardless of whether a market capitalization goal is actually achieved. Stock-based compensation represents a non-cash expense and is recorded in sales, general, and administrative operating expense on our consolidated statements of operations and comprehensive income. The first eleven market capitalization goals have been achieved as of March 31, 2023 while the final market capitalization goal was achieved in April 2023. As of March 31, 2023, 5.8 million stock options have been certified by the Compensation Committee and vested. As twelve operational goals have been achieved or are considered probable of achievement, we recorded stock-based compensation expense of $246.0 million related to the CEO Performance Award from the grant date through March 31, 2023, with no unamortized expense remaining. The number of stock options that are expected to vest upon certification by the Compensation Committee related to the remaining tranche is approximately 0.5 million shares. On March 28, 2023, the Company's Board of Directors approved a new stock option grant to our CEO (the “2023 CEO Performance Award”), which is subject to shareholder approval at our upcoming Annual Meeting of Shareholders. The 2023 CEO Performance Award will consist of 10 vesting tranches, each equal to 0.5% of the Company's outstanding common stock as of March 27, 2023, the business day prior to the date the award was approved by the Board of Directors. The stock options comprising the 2023 CEO Performance Award will have a per share exercise price equal to $218.59, which reflects the closing price for a share of the Company’s common stock as of the last trading day immediately preceding . eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the 2019 Stock Incentive Plan (the “2019 Plan”), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our eXponential Stock Performance Plan (“XSPP”) and grants of eXponential Stock Units (“XSUs”) under the plan. Initial awards under the plan were granted in January 2019, with additional employee awards granted since that date. The XSUs are grants of Restricted Stock Units (“RSUs”), each with a term of approximately nine years, that vest in 12 equal tranches. Each of the 12 tranches will vest upon certification by the Compensation Committee of the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA (CEO Performance Award) have been met for the previous four consecutive fiscal quarters. Beginning with the quarter ended June 30, 2021, new XSU grants are divided into a reduced number of tranches depending on employee eligibility and current market capitalization attainment. The XSPP contains an anti-dilution provision incorporated into the plan based on shareholder feedback, which affects the calculation of the market capitalization goals in the plan. The plan defines a maximum number of shares outstanding that may be used in the calculation of the market capitalization goals (the “XSU Maximum”). If the actual number of shares outstanding exceeds the XSU Maximum guardrail, then the lower pre-defined number of shares in the XSU Maximum, rather than the higher actual number of shares outstanding, is used to calculate market capitalization for the determination of the market capitalization goals in the XSPP, which, together with the operational goals, determines whether XSUs vest for participating employees. The XSU Maximum is defined as the actual number of shares outstanding on the original XSU grant date of January 2, 2019, increased by a 3% annual rate over the term of the XSPP and by shares issued upon the exercise of CEO Performance Award options. The XSU Maximum is also adjusted for acquisitions, spin-offs or other changes in the number of outstanding shares of common stock, if such changes have a corresponding adjustment on the market capitalization goals. The market capitalization and operational goals are identical to the CEO Performance Award, but a different number of shares is used to calculate the market capitalization goals if shares outstanding exceed the XSU Maximum. Additionally, because the grant date is different than that of the CEO Performance Award, the measurement period for market capitalization is not identical. As of March 31, 2023, actual shares outstanding exceeded the XSU Maximum. Accordingly, market capitalization as calculated for the purposes of achieving additional goals uses the lower XSU Maximum share amount rather than actual shares outstanding. The first ten market capitalization goals had been achieved as of March 31, 2023, and the final two market capitalization goals were achieved in April 2023. As all twelve operational goals have been achieved, we recorded stock-based compensation expense of $191.3 million related to the XSU awards from their respective grant dates through March 31, 2023. The number of XSU awards that would vest related to the remaining two tranches is approximately 0.8 million shares. As of March 31, 2023, we had $9.3 million of total unrecognized stock-based compensation expense, which will be recognized over a weighted-average period of 0.9 years. Restricted Stock Units The following table summarizes RSU activity for the three months ended March 31, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,565 $ 145.38 Granted 73 192.07 Released (103) 135.31 Forfeited (32) 152.72 Units outstanding, end of period 1,503 148.20 $ 338,003 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $224.85 multiplied by the number of RSUs outstanding. As of March 31, 2023, there was $176.3 million in unrecognized compensation costs related to RSUs under our stock plans for awards that are expected to vest. We expect to recognize the cost related to the RSUs over a weighted average period of 2.2 years. RSUs are released when vesting requirements are met. Certain RSUs that vested in the three months ended March 31, 2023 were net-share settled such that we withheld shares to cover the employees’ tax obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to RSUs were approximately one thousand and had a value of $0.2 million on their respective vesting dates as determined by the closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the condensed consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital. Performance Stock Units The following table summarizes PSU activity, inclusive of XSUs, for the three months ended March 31, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,369 $ 43.43 Granted — — Released (401) 33.95 Forfeited (12) 30.24 Units outstanding, end of period 956 47.58 $ 214,939 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $224.85 per share, multiplied by the number of PSUs outstanding. As of March 31, 2023, there was $12.3 million in unrecognized compensation costs related to PSUs under our stock plans for awards that are expected to vest. We expect to recognize the cost related to the PSUs over a weighted average period of 1.0 years. PSUs are released when vesting requirements are met. Certain PSUs that vested in the three months ended March 31, 2023 were net-share settled such that we withheld shares to cover the employees’ tax obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to PSUs were 160 thousand and had a value of $34.7 million on their respective vesting dates as determined by the closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the condensed consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital. Stock Option Activity The following table summarizes stock option activity for the three months ended March 31, 2023 (number of options and aggregate intrinsic value in thousands): Weighted Weighted Average Number Average Remaining of Exercise Contractual Aggregate Options Price Life (years) Intrinsic Value Options outstanding, beginning of year 2,438 $ 28.58 Granted — — Exercised (1,901) — Expired / terminated — — Options outstanding, end of period 537 28.58 4.91 $ 105,284 Options exercisable, end of period 6 28.58 4.91 1,165 Aggregate intrinsic value represents the difference between the exercise price of the underlying stock option awards and the closing market price of our common stock of $224.85 on March 31, 2023. Of the total stock options exercised during the three months ended March 31, 2023, 0.9 million were immediately sold to cover the exercise price and the option holder’s tax obligation for the applicable income and other employment taxes. Stock-based Compensation Expense The following table summarizes the composition of stock-based compensation expense for the three months ended March 31, 2023 and 2022 (in thousands): Three Months Ended March 31, 2023 2022 Cost of product sales and service sales $ 1,320 $ 1,108 Sales, general and administrative expenses 15,445 12,982 Research and development expenses 17,585 10,998 Total stock-based compensation expense $ 34,350 $ 25,088 Stock Incentive Plan In May 2022, our shareholders approved the Axon Enterprise, Inc. 2022 Stock Incentive Plan (the “2022 Plan”) authorizing an additional 2.5 million shares, plus remaining available shares under prior plans, for issuance under the new plan. Combined with the 2019 Plan and other legacy stock incentive plans, there are 2.7 million shares available for grant as of March 31, 2023. Stock Repurchase Plan In February 2016, our Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of our outstanding common stock subject to stock market conditions and corporate considerations. During the three months ended March 31, 2023 and 2022, no common shares were purchased under the program. As of March 31, 2023, $16.3 million remains available under the plan for future purchases. Any future purchases will be discretionary. At-the-Market equity offering During the three months ended March 31, 2023, we sold 154,500 shares of our common stock under our "at-the-market" equity offering program (the “ATM”). We generated approximately $34.2 million in aggregate gross proceeds from sales under the ATM. Aggregate net proceeds from the ATM were $33.7 million after deducting related expenses, including commissions to the sales agent and issuance costs of $0.5 million. We may sell up to a total of 3.0 million shares of our common stock under the ATM, with 2.3 million shares remaining as of March 31, 2023 |
Line of Credit
Line of Credit | 3 Months Ended |
Mar. 31, 2023 | |
Line of Credit. | |
Line of Credit | Note 12 - Line of Credit In December 2022, we entered into a Credit Agreement that provides for a senior unsecured multi-currency revolving credit facility in an aggregate principal amount of up to $200.0 million, $30.0 million of which is available for the issuance of letters of credit. The credit agreement will mature on the earlier of December 15, 2027 or the date that is six months prior to the stated maturity date of the 0.50% convertible senior notes due 2027 unless such Notes have been redeemed, repurchased, converted or defeased in full. Additionally, the credit agreement has an accordion feature which allows for an increase in the total line of credit up to $300.0 million, subject to each lender’s sole discretion. At March 31, 2023 and December 31, 2022, there were no borrowings under the line. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit. As of March 31, 2023 we had letters of credit outstanding of approximately $7.0 million under the facility and available borrowing of $193.0 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at Term SOFR plus 1.25 to 1.75% per year determined in accordance with a pricing grid based on our net debt to earnings before interest expense, taxes, depreciation and amortization ("EBITDA") ratio. EBITDA for the purposes of the credit agreement excludes investment interest income. We are required to comply with a net leverage ratio, defined as consolidated total indebtedness to EBITDA, of no greater than 3.50 to 1.00 based upon a trailing four fiscal quarter period. At March 31, 2023, our leverage ratio was 0.78 to 1.00. Additionally, we must comply with a consolidated interest coverage ratio, defined as EBITDA to consolidated interest expense, of no less than 3.50 to 1.00 based upon a trailing four fiscal quarter end. We are compliant with the consolidated interest coverage ratio, which is not meaningful for the three months ended March 31, 2023. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 13 - Commitments and Contingencies Product Litigation As a manufacturer of weapons and other law enforcement tools used in high-risk field environments, we are often the subject of products liability litigation concerning the use of our products. We are currently named as a defendant in four lawsuits in which the plaintiffs allege either wrongful death or personal injury in situations in which a TASER CED was used by law enforcement officers in connection with arrests or training. While the facts vary from case to case, these product liability claims typically allege defective product design, manufacturing, and/or failure to warn. They seek compensatory and sometimes punitive damages, often in unspecified amounts. We continue to aggressively defend all product litigation. As a general rule, it is our policy not to settle suspect injury or death cases. Exceptions are sometimes made where the settlement is strategically beneficial to us. Due to the confidential nature of our litigation strategy and the confidentiality agreements that are executed in the event of a settlement, we do not identify or comment on specific settlements by case or amount. Based on current information, we do not believe that the outcome of any such legal proceeding will have a material effect on our financial position, results of operations, or cash flows. We are self-insured for the first $5.0 million of any product claim made after 2014. No judgment or settlement has ever exceeded this amount in any products case. We continue to maintain product liability insurance coverage, including an insurance policy fronting arrangement, above our self-insured retention with various limits depending on the policy period. The litigation information in this note is current through the date of these financial statements. U.S. Federal Trade Commission Litigation The U.S. Federal Trade Commission (“FTC”) filed an administrative enforcement action in January 2020 regarding our May 2018 acquisition of an insolvent body worn camera competitor, Vievu LLC. The FTC alleges the merger was anticompetitive and adversely affected the body worn camera and digital evidence management market for “large metropolitan police departments,” which we deny. The administrative hearing is presently stayed pending our federal court constitutional challenges to the FTC’s structure. Even if we ultimately are required to divest Vievu and other assets, we do not expect that any such result will interfere with our ability to meet contractual obligations or implement our solutions. Prior to the FTC’s enforcement action, on January 3, 2020 we sued the FTC in federal court in the District of Arizona for declaratory and injunctive relief alleging the FTC’s structure is unconstitutional. The district court dismissed the action, without prejudice, for lack of jurisdiction and the Ninth Circuit affirmed in a split decision. The U.S. Supreme Court granted our petition for certiorari in January 2022 and heard oral argument on November 7, 2022. On April 17, 2023, the Supreme Court issued a unanimous decision in Axon’s favor, confirming district court jurisdiction for constitutional challenges to the structure and existence of federal agencies like the FTC. The case will be remanded to district court for further proceedings on the merits of Axon’s claims. As always, we are open to evaluating strategic alternatives to litigation if achievable on terms agreeable to the FTC and Axon and determined to be in the best interests of shareholders and customers. General From time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. After carefully assessing the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed reasonably possible but not probable, we determine whether it is possible to provide an estimate of the Based on our assessment of outstanding litigation and claims as of the date of these financial statements, we have determined that it is not reasonably probable that these lawsuits will individually, or in the aggregate, materially affect our results of operations, financial condition or cash flows. However, the outcome of any litigation is inherently uncertain and there can be no assurance that any expense, liability or damages that may ultimately result from the resolution of these matters will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage and will not have a material adverse effect on our operating results, financial condition or cash flows. Off-Balance Sheet Arrangements Under certain circumstances, we use letters of credit and surety bonds to guarantee our performance under various contracts, principally in connection with the installation and integration of Axon cameras and related technologies. Certain of our letters of credit and surety bonds have stated expiration dates with others being released as the contractual performance terms are completed. At March 31, 2023, we had outstanding letters of credit issued under our credit facility of $7.0 million that are expected to expire throughout 2023 and 2024. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (loss) | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (loss). | |
Accumulated Other Comprehensive Income (loss) | Note 14 – Accumulated Other Comprehensive Income (loss) The following tables reflect the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2022 $ (1,251) $ (5,928) $ (7,179) Other comprehensive income 184 1,676 1,860 Balance, March 31, 2023 $ (1,067) $ (4,252) $ (5,319) Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (489) (1,072) (1,561) Balance, March 31, 2022 $ (696) $ (2,182) $ (2,878) |
Segment Data
Segment Data | 3 Months Ended |
Mar. 31, 2023 | |
Segment Data | |
Segment Data | Note 15 - Segment Data Our operations comprise two reportable segments: the TASER segment and the Software and Sensors segment. Information relative to our reportable segments was as follows (in thousands): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 127,081 $ 92,308 $ 219,389 $ 111,154 $ 65,050 $ 176,204 Net sales from services 7,201 116,453 123,654 3,206 77,016 80,222 Net sales 134,282 208,761 343,043 114,360 142,066 256,426 Cost of product sales 50,583 57,001 107,584 40,625 38,727 79,352 Cost of service sales 180 31,177 31,357 — 21,335 21,335 Cost of sales 50,763 88,178 138,941 40,625 60,062 100,687 Gross margin $ 83,519 $ 120,583 $ 204,102 $ 73,735 $ 82,004 $ 155,739 Research and development $ 16,080 $ 54,847 $ 70,927 $ 9,896 $ 38,520 $ 48,416 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2022, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2022. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit loss, ● valuation of goodwill, intangible and long-lived assets, ● valuation of strategic investments, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, and ● recognition and measurement of contingencies and accrued litigation expense. Actual results could differ materially from those estimates. |
Segment Information | Segment Information Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the "Software and Sensors" segment); and the manufacture and sale of conducted electrical devices ("CEDs"), batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as "Axon Cloud revenue." Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker ("CODM"). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 15. |
Geographic Information and Major Customers / Suppliers | Geographic Information and Major Customers / Suppliers For the three months ended March 31, 2023, no individual country outside the U.S. represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three months ended March 31, 2023, no customer represented more than 10% of total net sales. At March 31, 2023 and December 31, 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the U.S., China, Republic of Korea, Malaysia, Mexico, Sri Lanka, Taiwan, and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have experienced supply chain disruptions relating to materials and port constraints, we have remained focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers. |
Income per Common Share | Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock options and unvested restricted stock units. The effects of outstanding stock options, unvested restricted stock units, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire the number of shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended March 31, 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 45,139 $ 54,871 Denominator: Weighted average shares outstanding 72,638 70,950 Dilutive effect of stock-based awards 1,242 1,399 Diluted weighted average shares outstanding 73,880 72,349 Net income per common share: Basic $ 0.62 $ 0.77 Diluted $ 0.61 $ 0.76 Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended March 31, 2023 2022 Stock-based awards 1,469 2,942 2027 Notes 3,017 — 2027 Warrants 3,017 — Total potentially dilutive securities 7,503 2,942 For additional information regarding our convertible senior notes, refer to Note 9. |
Standard Warranties | Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Three Months Ended March 31, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (438) (1,434) Warranty expense 2,928 116 Balance, end of period $ 3,301 $ 1,504 |
Fair Value Measurements and Financial Instruments | Fair Value Measurements and Financial Instruments We use the fair value framework that prioritizes the inputs to valuation techniques for measuring financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: ● Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. ● Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. ● Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about inputs that market participants would use in pricing an asset or liability. We have cash equivalents and investments, which at March 31, 2023 comprised money market funds, commercial paper, corporate bonds, term deposits, U.S. Government bonds, municipal bonds, agency bonds and U.S. Treasury inflation-protected securities certificates of deposit and U.S. Treasury bills. We have an investment in marketable securities, for which c hanges in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income, net. We have strategic investments in eight unconsolidated affiliates as of March 31, 2023. The estimated fair value of the investments was determined based on Level 3 inputs. In determining the estimated fair value of our strategic investments in privately held companies, we utilize observable data available to us as discussed further in Note 6. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at March 31, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the condensed consolidated balance sheet. |
Restricted Cash | Restricted Cash Restricted cash balances were $1.9 million as of March 31, 2023 and December 31, 2022, respectively. The balances were primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder |
Valuation of Goodwill, Intangibles and Long-lived Assets | Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such circumstances could include, but are not limited to, a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications are not material and had no effect on the reported results of operations. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Schedule of weighted average number of shares outstanding and earnings per share | The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended March 31, 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 45,139 $ 54,871 Denominator: Weighted average shares outstanding 72,638 70,950 Dilutive effect of stock-based awards 1,242 1,399 Diluted weighted average shares outstanding 73,880 72,349 Net income per common share: Basic $ 0.62 $ 0.77 Diluted $ 0.61 $ 0.76 |
Schedule of potentially dilutive securities excluded in calculation of diluted net income per share | Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended March 31, 2023 2022 Stock-based awards 1,469 2,942 2027 Notes 3,017 — 2027 Warrants 3,017 — Total potentially dilutive securities 7,503 2,942 |
Summary of changes in our estimated warranty reserve | Changes in our estimated product warranty liabilities were as follows (in thousands): Three Months Ended March 31, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (438) (1,434) Warranty expense 2,928 116 Balance, end of period $ 3,301 $ 1,504 |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenues. | |
Summary of Revenue by Product and Service Offering and Geography | The following tables present our revenues by primary product and service offering (in thousands): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 67,472 $ — $ 67,472 $ 63,164 $ — $ 63,164 Cartridges 46,800 — 46,800 37,825 — 37,825 Axon Evidence and Cloud Services 7,201 118,314 125,515 3,017 79,939 82,956 Extended Warranties 7,670 14,085 21,755 6,679 9,061 15,740 Axon Body Cameras and Accessories — 38,797 38,797 — 38,517 38,517 Axon Fleet Systems — 32,972 32,972 — 13,820 13,820 Other (1) (2) 5,139 4,593 9,732 3,675 729 4,404 Total $ 134,282 $ 208,761 $ 343,043 $ 114,360 $ 142,066 $ 256,426 (1) TASER segment “Other” includes smaller categories, such as VR hardware, weapons training revenue such as revenue associated with our Master Instructor School, and TASER consumer device sales. (2) Software and Sensors segment “Other” includes revenue from items including Signal Sidearm, Interview Room and Axon Air. The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended March 31, 2023 2022 United States $ 290,938 85 % $ 214,214 84 % Other countries 52,105 15 42,212 16 Total $ 343,043 100 % $ 256,426 100 % |
Summary of contract with customer, assets and liabilities | The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the three months ended March 31, 2023 (in thousands): March 31, 2023 Contract assets, net $ 271,755 Contract liabilities (deferred revenue) 658,427 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 133,707 Contract liabilities (deferred revenue) consisted of the following (in thousands): March 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 13,333 $ 18,198 $ 31,531 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 28,105 15,467 43,572 26,229 15,338 41,567 41,438 33,665 75,103 40,436 32,956 73,392 Hardware: TASER 46,575 16,896 63,471 49,361 12,640 62,001 Software and Sensors 61,554 106,398 167,952 50,426 109,227 159,653 108,129 123,294 231,423 99,787 121,867 221,654 Services: TASER 6,016 9,425 15,441 7,637 9,501 17,138 Software and Sensors 252,478 83,982 336,460 212,177 83,679 295,856 258,494 93,407 351,901 219,814 93,180 312,994 Total $ 408,061 $ 250,366 $ 658,427 $ 360,037 $ 248,003 $ 608,040 March 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 65,924 $ 44,519 $ 110,443 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 342,137 205,847 547,984 288,832 208,244 497,076 Total $ 408,061 $ 250,366 $ 658,427 $ 360,037 $ 248,003 $ 608,040 |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Cash, Cash Equivalents and Investments | |
Summary of Cash, Cash Equivalents, Marketable Securities, and Available-for-Sale Investments | The following tables summarize our cash, cash equivalents, marketable securities, and available-for-sale investments at March 31, 2023 and December 31, 2022 (in thousands): As of March 31, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 213,446 $ — $ — $ 213,446 $ 213,446 $ — $ — $ — Level 1: Money market funds 49,968 — — 49,968 49,968 — — — Agency bonds 160,615 39 (230) 160,424 — — 154,688 5,736 Treasury bills 41,079 6 (2) 41,083 — — 41,083 — Marketable securities 90,000 — (35,190) 54,810 — 54,810 — — Subtotal 341,662 45 (35,422) 306,285 49,968 54,810 195,771 5,736 Level 2: State and municipal obligations 3,026 — (14) 3,012 — — 3,012 — Term deposits 175,000 — — 175,000 — — 175,000 — Corporate bonds 241,401 45 (1,081) 240,365 — — 226,468 13,897 U.S. government 43,948 — (158) 43,790 — — 32,307 11,483 Treasury inflation-protected securities 2,525 17 — 2,542 — — 2,542 — Commercial paper 140,029 — — 140,029 — — 140,029 — Subtotal 605,929 62 (1,253) 604,738 — — 579,358 25,380 Total $ 1,161,037 $ 107 $ (36,675) $ 1,124,469 $ 263,414 $ 54,810 $ 775,129 $ 31,116 As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. Government 30,525 — (159) 30,366 — — 30,366 — Treasury inflation-protected securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207 |
Expected Credit Losses (Tables)
Expected Credit Losses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Expected Credit Losses | |
Schedule of roll-forward of allowance for credit losses | The following table provides a roll-forward of the allowance for expected credit losses that is deducted from the amortized cost basis of accounts receivable, notes receivable, and contract assets to present the net amount expected to be collected (in thousands): Three Months Ended March 31, 2023 United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 Provision for expected credit losses (76) 104 28 Amounts written off charged against the allowance (353) (5) (358) Balance, end of period $ 2,635 $ 665 $ 3,300 |
Schedule of allowance for expected credit losses for each type of customer receivable | March 31, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,029 $ 2,176 Contract assets, net 1,211 1,360 Long-term notes receivable, net of current portion 60 94 Total allowance for expected credit losses on customer receivables $ 3,300 $ 3,630 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory | |
Inventory | Inventory consisted of the following at March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Raw materials $ 86,607 $ 72,740 Finished goods 133,661 129,731 Total inventory $ 220,268 $ 202,471 |
Strategic Investments (Tables)
Strategic Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Strategic Investments | |
Schedule of Roll-Forward of Strategic Investments | The following tables provide a roll-forward of the balance of strategic investments (in thousands): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 $ 83,520 Investments — — — — 500 — 500 Observable price changes: Unrealized gains — — — — 41,893 28,539 70,432 Unrealized losses — — — — — — — Exercises — — — — — — — Sales — — — — — — — Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 123,168 $ 31,284 $ 154,452 Inception to date Strategic investments Warrants Call options Total Investments $ 109,482 $ 3,047 $ 17,233 $ 129,762 Observable price changes: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses (1,108) (377) — (1,485) Exercises 96,719 (30,089) — 66,630 Sales (14,546) — — (14,546) Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Variable Interest Entities | |
Schedule of the nonconsolidated VIEs | March 31, 2023 December 31, 2022 Total nonconsolidated variable interest entities: Carrying value of variable interest - assets $ 11,530 $ 11,530 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 11,530 11,530 Total $ 11,530 $ 11,530 (1) |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Liabilities | |
Schedule of Accrued liabilities | Accrued liabilities consisted of the following at March 31, 2023 and December 31, 2022 (in thousands): March 31, 2023 December 31, 2022 Accrued salaries, benefits and bonus $ 63,975 $ 97,882 Accrued professional, consulting and lobbying fees 6,840 3,861 Accrued warranty expense 3,301 811 Accrued income and other taxes 7,486 13,559 Accrued inventory in transit 11,318 10,548 Other accrued expenses 27,687 29,273 Accrued liabilities $ 120,607 $ 155,934 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Convertible Senior Notes | |
Schedule of net carrying amount of convertible senior notes | March 31, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (15,276) (16,033) Convertible notes carrying amount, net $ 674,724 $ 673,967 March 31, 2023 December 31, 2022 2027 Notes $ 812.3 $ 687.3 |
Schedule of interest expense of convertible senior notes | March 31, 2023 December 31, 2022 Contractual interest expense $ 863 $ 211 Amortization of debt issuance costs 756 198 Total interest expense $ 1,619 $ 409 |
Schedule of convertible note hedge transaction | Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 |
Schedule of warrants details of convertible senior notes | Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stockholders' Equity | |
Equity Compensation Goals | Revenue Goal (1) (in thousands) Achievement Status Adjusted EBITDA (in thousands) Achievement Status Goal #1, $710,058 Achieved Goal #1, $125,000 Achieved Goal #2, $860,058 Achieved Goal #2, $155,000 Achieved Goal #3, $1,010,058 Achieved Goal #3, $175,000 Achieved Goal #4, $1,210,058 Achieved Goal #4, $190,000 Achieved Goal #5, $1,410,058 Not Applicable Goal #5, $200,000 Achieved Goal #6, $1,610,058 Not Applicable Goal #6, $210,000 Achieved Goal #7, $1,810,058 Not Applicable Goal #7, $220,000 Achieved Goal #8, $2,010,058 Not Applicable Goal #8, $230,000 Achieved (1) In connection with the business acquisition that was completed during the three months ended September 30, 2018, the revenue goals were adjusted for the acquiree’s Target Revenue, as defined in the CEO Performance Award agreement. |
Summary of Restricted Stock Unit Activity | The following table summarizes RSU activity for the three months ended March 31, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,565 $ 145.38 Granted 73 192.07 Released (103) 135.31 Forfeited (32) 152.72 Units outstanding, end of period 1,503 148.20 $ 338,003 |
Summary of Performance Stock Unit Activity | The following table summarizes PSU activity, inclusive of XSUs, for the three months ended March 31, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,369 $ 43.43 Granted — — Released (401) 33.95 Forfeited (12) 30.24 Units outstanding, end of period 956 47.58 $ 214,939 |
Summary of the Company's Stock Options Activity | The following table summarizes stock option activity for the three months ended March 31, 2023 (number of options and aggregate intrinsic value in thousands): Weighted Weighted Average Number Average Remaining of Exercise Contractual Aggregate Options Price Life (years) Intrinsic Value Options outstanding, beginning of year 2,438 $ 28.58 Granted — — Exercised (1,901) — Expired / terminated — — Options outstanding, end of period 537 28.58 4.91 $ 105,284 Options exercisable, end of period 6 28.58 4.91 1,165 |
Reported Share-Based Compensation | The following table summarizes the composition of stock-based compensation expense for the three months ended March 31, 2023 and 2022 (in thousands): Three Months Ended March 31, 2023 2022 Cost of product sales and service sales $ 1,320 $ 1,108 Sales, general and administrative expenses 15,445 12,982 Research and development expenses 17,585 10,998 Total stock-based compensation expense $ 34,350 $ 25,088 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (loss) (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (loss). | |
Summary of changes in accumulated other comprehensive income (loss), net of tax | The following tables reflect the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2022 $ (1,251) $ (5,928) $ (7,179) Other comprehensive income 184 1,676 1,860 Balance, March 31, 2023 $ (1,067) $ (4,252) $ (5,319) Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (489) (1,072) (1,561) Balance, March 31, 2022 $ (696) $ (2,182) $ (2,878) |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Data | |
Summary of Operational Information Relative to the Company's Reportable Segments | Information relative to our reportable segments was as follows (in thousands): Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 127,081 $ 92,308 $ 219,389 $ 111,154 $ 65,050 $ 176,204 Net sales from services 7,201 116,453 123,654 3,206 77,016 80,222 Net sales 134,282 208,761 343,043 114,360 142,066 256,426 Cost of product sales 50,583 57,001 107,584 40,625 38,727 79,352 Cost of service sales 180 31,177 31,357 — 21,335 21,335 Cost of sales 50,763 88,178 138,941 40,625 60,062 100,687 Gross margin $ 83,519 $ 120,583 $ 204,102 $ 73,735 $ 82,004 $ 155,739 Research and development $ 16,080 $ 54,847 $ 70,927 $ 9,896 $ 38,520 $ 48,416 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 USD ($) customer item country segment | Dec. 31, 2022 USD ($) customer | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of reportable segments | segment | 2 | |
Warranty period | 1 year | |
Cash surrender value of corporate-owned life insurance policies | $ 5,100,000 | $ 4,300,000 |
Investments in number of unconsolidated affiliates | item | 8 | |
Denomination of notes used for determination of fair value | $ 1,000 | |
Restricted cash balance | 1,900,000 | $ 1,900,000 |
Prepaid expenses and other assets | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Restricted cash balance | 1,800,000 | |
Other long-term assets | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Restricted cash balance | $ 100,000 | |
Net Sales | Geographic Concentration Risk | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of countries outside the U.S. representing more than 10% of total net sales | country | 0 | |
Net Sales | Customer Concentration Risk | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of major customers | customer | 0 | |
Accounts and notes receivable and contract assets | Customer Concentration Risk | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of major customers | customer | 0 | 0 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Weighted Average Number of Shares Outstanding and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator for basic and diluted earnings per share: | ||
Net income | $ 45,139 | $ 54,871 |
Denominator: | ||
Weighted average shares outstanding - basic (in shares) | 72,638 | 70,950 |
Dilutive effect of stock-based awards (in shares) | 1,242 | 1,399 |
Diluted weighted average shares outstanding (in shares) | 73,880 | 72,349 |
Net income per common share: | ||
Basic (in dollars per share) | $ 0.62 | $ 0.77 |
Diluted (in dollars per share) | $ 0.61 | $ 0.76 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Antidilutive Securities Excluded From Computation of EPS (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive securities | 7,503 | 2,942 |
Stock-based awards | ||
Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive securities | 1,469 | 2,942 |
2027 Notes | ||
Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive securities | 3,017 | |
2027 Warrants | ||
Antidilutive securities excluded from computation of earnings per share | ||
Total potentially dilutive securities | 3,017 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Summary of Changes in Estimated Warranty Reserve (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Movement in Standard and Extended Product Warranty | ||
Balance, beginning of period | $ 811 | $ 2,822 |
Utilization of reserve | (438) | (1,434) |
Warranty expense | 2,928 | 116 |
Balance, end of period | $ 3,301 | $ 1,504 |
Revenues - Revenues By Products
Revenues - Revenues By Products And Service Offerings (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | $ 343,043 | $ 256,426 |
TASER Devices (Professional) | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 67,472 | 63,164 |
Cartridges | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 46,800 | 37,825 |
Axon Evidence and cloud services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 125,515 | 82,956 |
Extended warranties | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 21,755 | 15,740 |
Axon Body and Camera Accessories | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 38,797 | 38,517 |
Axon Fleet Systems | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 32,972 | 13,820 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 9,732 | 4,404 |
TASER | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 134,282 | 114,360 |
TASER | TASER Devices (Professional) | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 67,472 | 63,164 |
TASER | Cartridges | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 46,800 | 37,825 |
TASER | Axon Evidence and cloud services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 7,201 | 3,017 |
TASER | Extended warranties | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 7,670 | 6,679 |
TASER | Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 5,139 | 3,675 |
Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 208,761 | 142,066 |
Software and Sensors | Axon Evidence and cloud services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 118,314 | 79,939 |
Software and Sensors | Extended warranties | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 14,085 | 9,061 |
Software and Sensors | Axon Body and Camera Accessories | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 38,797 | 38,517 |
Software and Sensors | Axon Fleet Systems | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 32,972 | 13,820 |
Software and Sensors | Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | $ 4,593 | $ 729 |
Revenues - Revenues By Geograph
Revenues - Revenues By Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | $ 343,043 | $ 256,426 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | 290,938 | 214,214 |
Other countries | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from contract with customers | $ 52,105 | $ 42,212 |
Revenue from Contract with Customer | Geographic Concentration Risk | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk (as a percentage) | 100% | 100% |
Revenue from Contract with Customer | Geographic Concentration Risk | United States | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk (as a percentage) | 85% | 84% |
Revenue from Contract with Customer | Geographic Concentration Risk | Other countries | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk (as a percentage) | 15% | 16% |
Revenues - Contract Assets, Con
Revenues - Contract Assets, Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Revenues. | ||
Contract assets, net | $ 271,755 | |
Contract liabilities (deferred revenue) | 658,427 | $ 608,040 |
Revenue recognized in the period from: | ||
Amounts included in contract liabilities at the beginning of the period | $ 133,707 |
Revenues - Schedule Of Contract
Revenues - Schedule Of Contract Liabilities - Deferred revenue (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Disaggregation of Revenue [Line Items] | ||
Current | $ 408,061 | $ 360,037 |
Long-Term | 250,366 | 248,003 |
Total | 658,427 | 608,040 |
TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 65,924 | 71,205 |
Long-Term | 44,519 | 39,759 |
Total | 110,443 | 110,964 |
Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 342,137 | 288,832 |
Long-Term | 205,847 | 208,244 |
Total | 547,984 | 497,076 |
Warranty | ||
Disaggregation of Revenue [Line Items] | ||
Current | 41,438 | 40,436 |
Long-Term | 33,665 | 32,956 |
Total | 75,103 | 73,392 |
Warranty | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 13,333 | 14,207 |
Long-Term | 18,198 | 17,618 |
Total | 31,531 | 31,825 |
Warranty | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 28,105 | 26,229 |
Long-Term | 15,467 | 15,338 |
Total | 43,572 | 41,567 |
Hardware | ||
Disaggregation of Revenue [Line Items] | ||
Current | 108,129 | 99,787 |
Long-Term | 123,294 | 121,867 |
Total | 231,423 | 221,654 |
Hardware | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 46,575 | 49,361 |
Long-Term | 16,896 | 12,640 |
Total | 63,471 | 62,001 |
Hardware | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 61,554 | 50,426 |
Long-Term | 106,398 | 109,227 |
Total | 167,952 | 159,653 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Current | 258,494 | 219,814 |
Long-Term | 93,407 | 93,180 |
Total | 351,901 | 312,994 |
Services | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 6,016 | 7,637 |
Long-Term | 9,425 | 9,501 |
Total | 15,441 | 17,138 |
Services | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 252,478 | 212,177 |
Long-Term | 83,982 | 83,679 |
Total | $ 336,460 | $ 295,856 |
Revenues - Revenue Performance
Revenues - Revenue Performance Obligations (Details) $ in Billions | Mar. 31, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 4.8 |
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation to be recognized in the next twelve months (as a percentage) | 15% |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation to be recognized in the next twelve months (as a percentage) | 25% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2033-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 10 years |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | $ 1,161,037 | $ 1,183,222 | |
Gross Unrealized Gains | 107 | 57 | |
Gross Unrealized Losses | (36,675) | (52,379) | |
Fair Value | 1,124,469 | 1,130,900 | |
Cash and Cash Equivalents | 263,414 | 353,684 | |
Marketable Securities | 54,810 | 39,240 | |
Short-Term Investments | 775,129 | 581,769 | |
Long-Term Investments | 31,116 | 156,207 | |
Debt securities, available-for-sale, unrealized Loss | 375,600 | ||
Continuous unrealized loss position of available-for-sale investments, unrealized losses | 17,600 | ||
Continuous unrealized loss position of available-for-sale investments, gross unrealized losses | 600 | ||
Share Purchase Agreement with CLBT | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Marketable securities, unrealized gain (loss) | 15,600 | ||
Common stock | Share Purchase Agreement with CLBT | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Marketable Securities | $ 90,000 | ||
Investment owned, shares held | 9,000,000 | ||
Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 341,662 | 378,805 | |
Gross Unrealized Gains | 45 | 24 | |
Gross Unrealized Losses | (35,422) | (51,026) | |
Fair Value | 306,285 | 327,803 | |
Cash and Cash Equivalents | 49,968 | 115,769 | |
Marketable Securities | 54,810 | 39,240 | |
Short-Term Investments | 195,771 | 78,427 | |
Long-Term Investments | 5,736 | 94,367 | |
Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 605,929 | 660,673 | |
Gross Unrealized Gains | 62 | 33 | |
Gross Unrealized Losses | (1,253) | (1,353) | |
Fair Value | 604,738 | 659,353 | |
Cash and Cash Equivalents | 94,171 | ||
Short-Term Investments | 579,358 | 503,342 | |
Long-Term Investments | 25,380 | 61,840 | |
Cash | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 213,446 | 143,744 | |
Fair Value | 213,446 | 143,744 | |
Cash and Cash Equivalents | 213,446 | 143,744 | |
Money market funds | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 49,968 | 2,669 | |
Fair Value | 49,968 | 2,669 | |
Cash and Cash Equivalents | 49,968 | 2,669 | |
Agency bonds | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 160,615 | 164,486 | |
Gross Unrealized Gains | 39 | 6 | |
Gross Unrealized Losses | (230) | (263) | |
Fair Value | 160,424 | 164,229 | |
Short-Term Investments | 154,688 | 69,862 | |
Long-Term Investments | 5,736 | 94,367 | |
Treasury bills | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 41,079 | ||
Gross Unrealized Gains | 6 | ||
Gross Unrealized Losses | (2) | ||
Fair Value | 41,083 | ||
Short-Term Investments | 41,083 | ||
Marketable securities | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 90,000 | 90,000 | |
Gross Unrealized Losses | (35,190) | (50,760) | |
Fair Value | 54,810 | 39,240 | |
Marketable Securities | 54,810 | 39,240 | |
State and municipal obligations | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 3,026 | 4,980 | |
Gross Unrealized Losses | (14) | (33) | |
Fair Value | 3,012 | 4,947 | |
Short-Term Investments | 3,012 | 4,947 | |
Corporate bonds | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 257,422 | ||
Gross Unrealized Gains | 33 | ||
Gross Unrealized Losses | (1,159) | ||
Fair Value | 256,296 | ||
Cash and Cash Equivalents | 28,883 | ||
Short-Term Investments | 168,074 | ||
Long-Term Investments | 59,339 | ||
Treasury bills | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 121,650 | ||
Gross Unrealized Gains | 18 | ||
Gross Unrealized Losses | (3) | ||
Fair Value | 121,665 | ||
Cash and Cash Equivalents | 113,100 | ||
Short-Term Investments | 8,565 | ||
Certificates of deposit | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 5,002 | ||
Fair Value | 5,002 | ||
Short-Term Investments | 5,002 | ||
Term deposits | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 175,000 | 200,000 | |
Fair Value | 175,000 | 200,000 | |
Cash and Cash Equivalents | 25,000 | ||
Short-Term Investments | 175,000 | 175,000 | |
Corporate bonds | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 241,401 | ||
Gross Unrealized Gains | 45 | ||
Gross Unrealized Losses | (1,081) | ||
Fair Value | 240,365 | ||
Short-Term Investments | 226,468 | ||
Long-Term Investments | 13,897 | ||
Commercial paper | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 140,029 | 160,241 | |
Fair Value | 140,029 | 160,241 | |
Cash and Cash Equivalents | 40,288 | ||
Short-Term Investments | 140,029 | 119,953 | |
U.S. government | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 43,948 | 30,525 | |
Gross Unrealized Losses | (158) | (159) | |
Fair Value | 43,790 | 30,366 | |
Short-Term Investments | 32,307 | 30,366 | |
Long-Term Investments | 11,483 | ||
Treasury inflation-protected securities | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 2,525 | 2,503 | |
Gross Unrealized Gains | 17 | ||
Gross Unrealized Losses | (2) | ||
Fair Value | 2,542 | 2,501 | |
Short-Term Investments | $ 2,542 | ||
Long-Term Investments | $ 2,501 |
Expected Credit Losses (Details
Expected Credit Losses (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | $ 3,630 |
Provision for expected credit losses | 28 |
Amounts written off charged against the allowance | (358) |
Balance, end of period | 3,300 |
United States | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | 3,064 |
Provision for expected credit losses | (76) |
Amounts written off charged against the allowance | (353) |
Balance, end of period | 2,635 |
Other countries | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | 566 |
Provision for expected credit losses | 104 |
Amounts written off charged against the allowance | (5) |
Balance, end of period | $ 665 |
Expected Credit Losses - Type O
Expected Credit Losses - Type Of Customer Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Expected Credit Losses | ||
Accounts receivable and notes receivable, current | $ 2,029 | $ 2,176 |
Contract assets, net | 1,211 | 1,360 |
Long-term notes receivable, net of current portion | 60 | 94 |
Total allowance for expected credit losses on customer receivables | $ 3,300 | $ 3,630 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory | ||
Raw materials | $ 86,607 | $ 72,740 |
Finished goods | 133,661 | 129,731 |
Total inventory | $ 220,268 | $ 202,471 |
Strategic Investments (Details)
Strategic Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 37 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | |
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | $ 296,563 | $ 83,520 | |
Investments | 500 | $ 129,762 | |
Observable price changes, Realized gains | 12,312 | ||
Observable price changes, Unrealized gains | 0 | 70,432 | 103,890 |
Observable price changes, Unrealized losses | (1,485) | ||
Exercises | 66,630 | ||
Sales | (14,546) | ||
Balance, end of period | 296,563 | 154,452 | 296,563 |
Strategic investments | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 277,676 | 80,775 | |
Investments | 500 | 109,482 | |
Observable price changes, Realized gains | 12,312 | ||
Observable price changes, Unrealized gains | 0 | 41,893 | 74,817 |
Observable price changes, Unrealized losses | (1,108) | ||
Exercises | 96,719 | ||
Sales | (14,546) | ||
Balance, end of period | 277,676 | 123,168 | 277,676 |
Warrants | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 1,654 | 2,745 | |
Investments | 3,047 | ||
Observable price changes, Unrealized gains | 0 | 28,539 | 29,073 |
Observable price changes, Unrealized losses | (377) | ||
Exercises | (30,089) | ||
Balance, end of period | 1,654 | $ 31,284 | 1,654 |
Call options | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 17,233 | ||
Investments | 17,233 | ||
Observable price changes, Unrealized gains | 0 | ||
Balance, end of period | $ 17,233 | $ 17,233 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Total nonconsolidated variable interest entities: | ||
Carrying value of variable interest - assets | $ 3,007,949 | $ 2,851,894 |
Carrying value of variable interest - liabilities | 1,604,954 | 1,583,403 |
Nonconsolidated VIEs | ||
Total nonconsolidated variable interest entities: | ||
Carrying value of variable interest - assets | 11,530 | 11,530 |
Maximum exposure to loss: | ||
Non-public equity | 11,530 | 11,530 |
Total | $ 11,530 | $ 11,530 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Accrued Liabilities | ||||
Accrued salaries, benefits and bonus | $ 63,975 | $ 97,882 | ||
Accrued professional, consulting and lobbying fees | 6,840 | 3,861 | ||
Accrued warranty expense | 3,301 | 811 | $ 1,504 | $ 2,822 |
Accrued income and other taxes | 7,486 | 13,559 | ||
Accrued inventory in transit | 11,318 | 10,548 | ||
Other accrued expenses | 27,687 | 29,273 | ||
Accrued liabilities | $ 120,607 | $ 155,934 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Dec. 31, 2022 | Mar. 31, 2023 | |
Senior Convertible Notes | ||
Denomination of notes used for determination of fair value | $ 1,000 | |
2027 Notes | ||
Senior Convertible Notes | ||
Aggregate principal amount | $ 690,000,000 | $ 690,000,000 |
Interest rate (as a percent) | 0.50% | |
Issuance costs | $ 16,200,000 | |
Net proceeds from issuance of notes | $ 673,800,000 | |
Effective interest rate | 0.99% | |
Repurchase price (as percentage) | 100% | |
Denomination of notes used for determination of fair value | $ 1,000 | $ 1,000 |
Fair value of notes | 687,300,000 | $ 812,300,000 |
2027 Notes | Maximum | ||
Senior Convertible Notes | ||
Additional principal amount purchase option | $ 90,000,000 |
Convertible Senior Notes - Net
Convertible Senior Notes - Net carrying amount (Details) - 2027 Notes - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Senior Convertible Notes | ||
Principal | $ 690,000 | $ 690,000 |
Unamortized debt issuance costs | (15,276) | (16,033) |
Convertible notes carrying amount, net | $ 674,724 | $ 673,967 |
Convertible Senior Notes - Inte
Convertible Senior Notes - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Senior Convertible Notes | ||
Amortization of debt issuance costs | $ 756 | |
Convertible Note Hedge 2027 | ||
Senior Convertible Notes | ||
Contractual interest expense | 863 | $ 211 |
Amortization of debt issuance costs | 756 | 198 |
Total interest expense | $ 1,619 | $ 409 |
Convertible Senior Notes - Hedg
Convertible Senior Notes - Hedge (Details) - 2027 Note Hedge | Mar. 31, 2023 USD ($) |
Senior Convertible Notes | |
Purchase price | $ 194,994 |
Shares purchased | 3,016,680 |
Convertible Senior Notes - Warr
Convertible Senior Notes - Warrants (Details) - 2027 Warrant | 3 Months Ended |
Mar. 31, 2023 USD ($) D $ / security shares | |
Senior Convertible Notes | |
Proceeds | $ | $ 124,269 |
Shares | shares | 3,016,680 |
Strike Price | $ / security | 338.86 |
Warrants exercise trading day period | D | 60 |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Income Taxes | |
Deferred tax assets, net | $ 171.1 |
Liability for unrecognized tax benefits | 22.3 |
Research and development tax credit studies | $ 5 |
Effective tax rate (as a percentage) | (7.80%) |
Effective tax rate, before discrete period adjustment (as a percentage) | 22.80% |
Discrete tax benefit, stock-based compensation | $ 13 |
Stockholders' Equity - CEO Perf
Stockholders' Equity - CEO Performance Award - Additional Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 58 Months Ended | ||
Mar. 28, 2023 tranche $ / shares | May 24, 2018 USD ($) item tranche shares | Mar. 31, 2023 USD ($) shares | Mar. 31, 2023 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Market capitalization goal for such tranche | $ 2,500,000 | |||
Market capitalization goal increment | $ 1,000,000 | |||
Recorded share-based compensation expense | $ 246,000 | |||
Number of awards expected to vest | shares | 500,000 | 500,000 | ||
Revenue goal number 1 | $ 710,058 | $ 710,058 | ||
Revenue goal number 2 | 860,058 | 860,058 | ||
Revenue goal number 3 | 1,010,058 | 1,010,058 | ||
Revenue goal number 4 | 1,210,058 | 1,210,058 | ||
Revenue goal number 5 | 1,410,058 | 1,410,058 | ||
Revenue goal number 6 | 1,610,058 | 1,610,058 | ||
Revenue goal number 7 | 1,810,058 | 1,810,058 | ||
Revenue goal number 8 | 2,010,058 | 2,010,058 | ||
Adjusted EBITDA goal number 1 | 125,000 | 125,000 | ||
Adjusted EBITDA goal number 2 | 155,000 | 155,000 | ||
Adjusted EBITDA goal number 3 | 175,000 | 175,000 | ||
Adjusted EBITDA goal number 4 | 190,000 | 190,000 | ||
Adjusted EBITDA goal number 5 | 200,000 | 200,000 | ||
Adjusted EBITDA goal number 6 | 210,000 | 210,000 | ||
Adjusted EBITDA goal number 7 | 220,000 | 220,000 | ||
Adjusted EBITDA goal number 8 | $ 230,000 | 230,000 | ||
Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance shares authorized (in shares) | shares | 6,365,856 | |||
Number of options vested | shares | 5,800,000 | |||
Chief Executive Officer | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of vesting tranches of share-based awards | tranche | 12 | |||
Vesting period | 10 years | |||
Number of performance goals, revenue | item | 8 | |||
Number of performance goals, adjusted EBITDA | item | 8 | |||
Chief Executive Officer | Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of vesting tranches of share-based awards | tranche | 10 | |||
Outstanding percentage of common stock | 0.50% | |||
Weighted average exercise price (in dollars per share) | $ / shares | $ 218.59 | |||
Unrecognized stock-based compensation expense | $ 0 | $ 0 |
Stockholders' Equity - eXponent
Stockholders' Equity - eXponential Stock Performance Plan (Details) shares in Millions, $ in Millions | 3 Months Ended | 50 Months Ended | 58 Months Ended | ||
Feb. 12, 2019 USD ($) item tranche | May 24, 2018 USD ($) | Mar. 31, 2023 USD ($) shares | Mar. 31, 2023 USD ($) shares | Mar. 31, 2023 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Market capitalization goal for such tranche | $ 2,500 | ||||
Market capitalization goal increment | $ 1,000 | ||||
Recorded share-based compensation expense | $ 246 | ||||
Number of awards expected to vest | shares | 0.5 | 0.5 | 0.5 | ||
eXponential Stock Units | 2019 eXponential Stock Performance Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expiration period | 9 years | ||||
Number of vesting tranches of share-based awards | tranche | 12 | ||||
Market capitalization goal for such tranche | $ 2,500 | ||||
Market capitalization goal increment | $ 1,000 | ||||
Number of performance goals, revenue | item | 8 | ||||
Number of performance goals, adjusted EBITDA | item | 8 | ||||
Anti-dilution provision, maximum shares growth rate per year | 3% | ||||
Recorded share-based compensation expense | $ 191.3 | ||||
Number of awards expected to vest | shares | 0.8 | 0.8 | 0.8 | ||
Unrecognized stock-based compensation expense | $ 9.3 | $ 9.3 | $ 9.3 | ||
Weighted average period over which costs are recognized | 10 months 24 days |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of RSU and PSU Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Number of Units outstanding, beginning of year (in shares) | shares | 1,565 |
Number of Units, Granted (in shares) | shares | 73 |
Number of Units, Released (in shares) | shares | (103) |
Number of Units, Forfeited (in shares) | shares | (32) |
Number of Units outstanding, end of period (in shares) | shares | 1,503 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted Average Grant Date Fair Value, Units outstanding, beginning of year (in dollars per share) | $ / shares | $ 145.38 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 192.07 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | $ / shares | 135.31 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 152.72 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ / shares | $ 148.20 |
Aggregate intrinsic value at end of period | $ | $ 338,003 |
Performance Stock Units (PSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Number of Units outstanding, beginning of year (in shares) | shares | 1,369 |
Number of Units, Released (in shares) | shares | (401) |
Number of Units, Forfeited (in shares) | shares | (12) |
Number of Units outstanding, end of period (in shares) | shares | 956 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted Average Grant Date Fair Value, Units outstanding, beginning of year (in dollars per share) | $ / shares | $ 43.43 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | $ / shares | 33.95 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 30.24 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ / shares | $ 47.58 |
Aggregate intrinsic value at end of period | $ | $ 214,939 |
Stockholders' Equity - RSU and
Stockholders' Equity - RSU and PSU - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 58 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Recorded share-based compensation expense | $ 246,000 | ||
Tax payments, for net share settlement of share based award | $ 34,841 | $ 1,388 | |
Stock options exercised | $ 54,346 | ||
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value price per share (in dollars per share) | $ 224.85 | $ 224.85 | |
Shares withheld, for net share settlement of share based award (in shares) | 900 | ||
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value price per share (in dollars per share) | $ 224.85 | $ 224.85 | |
Unrecognized stock-based compensation expense | $ 176,300 | $ 176,300 | |
Weighted average period over which costs are recognized | 2 years 2 months 12 days | ||
Shares withheld, for net share settlement of share based award (in shares) | 1 | ||
Tax payments, for net share settlement of share based award | $ 200 | ||
Performance Stock Units (PSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value price per share (in dollars per share) | $ 224.85 | $ 224.85 | |
Unrecognized stock-based compensation expense | $ 12,300 | $ 12,300 | |
Weighted average period over which costs are recognized | 1 year | ||
Shares withheld, for net share settlement of share based award (in shares) | 160 | ||
Tax payments, for net share settlement of share based award | $ 34,700 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Activity - Additional Information (Details) - $ / shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Aggregate intrinsic value price per share (in dollars per share) | $ 224.85 | |
Shares sold to cover tax obligation | 900 | |
Stock options exercised (in shares) | 1,901 | |
Number of options outstanding (in shares) | 537 | 2,438 |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of options outstanding (in shares) | 500 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of the Company's Stock Options Activity (Details) - Stock Options $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of options, Options outstanding, beginning of year (in shares) | 2,438 |
Number of options, Exercised (in shares) | (1,901) |
Number of options, Options outstanding, end of year (in shares) | 537 |
Number of options, Options exercisable, end of period (in shares) | 6 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Weighted average exercise price, Options outstanding, beginning of year (in dollars per share) | $ / shares | $ 28.58 |
Weighted average exercise price, Options outstanding, end of period (in dollars per share) | $ / shares | 28.58 |
Weighted average exercise price, Options exercisable, end of period (in dollars per share) | $ / shares | $ 28.58 |
Weighted average remaining contractual life, Options outstanding, end of period | 4 years 10 months 28 days |
Weighted average remaining contractual life, Options exercisable, end of period | 4 years 10 months 28 days |
Aggregate intrinsic value, Options outstanding, end of period | $ | $ 105,284 |
Aggregate intrinsic value, Options exercisable, end of period | $ | $ 1,165 |
Stockholders' Equity - Reported
Stockholders' Equity - Reported Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | $ 34,350 | $ 25,088 |
Cost of product sales and service sales | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | 1,320 | 1,108 |
Sales, general and administrative expenses | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | 15,445 | 12,982 |
Research and development expenses | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Stock-based compensation expense | $ 17,585 | $ 10,998 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Plan - Additional Information (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | May 31, 2022 | Feb. 29, 2016 | |
2022 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock reserved for issuance (in shares) | 2,500,000 | |||
2016 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding common stock repurchase program authorized amount (up to) | $ 50,000,000 | |||
Shares repurchased during period (in shares) | 0 | 0 | ||
Remaining authorized repurchase amount | $ 16,300,000 | |||
2022 Inducement Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for grant (in shares) | 2,700,000 |
Stockholders' Equity - At-the-M
Stockholders' Equity - At-the-Market equity offering - Additional Information (Details) - ATM Offering $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Issuance of common stock (in shares) | shares | 154,500 |
Gross proceeds | $ | $ 34.2 |
Net proceeds | $ | 33.7 |
Commissions | $ | $ 0.5 |
Maximum number of common stock shares to be sold | shares | 3,000,000 |
Number of shares remaining to be sold | shares | 2,300,000 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated leverage ratio | 0.78 | |
Senior Unsecured Multi Currency Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total availability under line of credit agreement | $ 200 | |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Total availability under line of credit agreement | 30 | |
Accordion feature allowing for increase in borrowing capacity | 300 | |
Letters of credit outstanding amount | $ 7 | |
Available borrowing under letter of credit | 193 | |
Line of credit borrowings | $ 0 | $ 0 |
Line of Credit | 2027 Notes | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity, Prior to Stated Maturity of Convertible Senior Notes | 6 months | |
Percentage of convertible senior notes | 0.50% | |
Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated interest coverage ratio | 3.50 | |
Minimum | Line of Credit | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate (as a percentage) | 1.25% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated leverage ratio | 3.50 | |
Maximum | Line of Credit | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate (as a percentage) | 1.75% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) lawsuit | |
Loss Contingencies [Line Items] | |
Number of lawsuits against Company | lawsuit | 4 |
Amount self-insured for any product claim | $ 5 |
Surety Bond | |
Loss Contingencies [Line Items] | |
Letters of credit outstanding amount | 7 |
Bonds outstanding | 14 |
Expiring in 2023 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 3.5 |
Expiring in 2024 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | $ 10.5 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Accumulated other comprehensive income (loss): | ||
Beginning balance | $ 1,268,491 | $ 1,047,849 |
Other comprehensive income (loss) | 1,860 | (1,561) |
Ending balance | 1,402,995 | 1,124,789 |
Accumulated Other Comprehensive Income (Loss) | ||
Accumulated other comprehensive income (loss): | ||
Beginning balance | (7,179) | (1,317) |
Other comprehensive income (loss) | 1,860 | (1,561) |
Ending balance | (5,319) | (2,878) |
Unrealized Gains (Losses) on Available-for-Sale Investments | ||
Accumulated other comprehensive income (loss): | ||
Beginning balance | (1,251) | (207) |
Other comprehensive income (loss) | 184 | (489) |
Ending balance | (1,067) | (696) |
Foreign Currency Translation | ||
Accumulated other comprehensive income (loss): | ||
Beginning balance | (5,928) | (1,110) |
Other comprehensive income (loss) | 1,676 | (1,072) |
Ending balance | $ (4,252) | $ (2,182) |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of reportable segments of company | segment | 2 | |
Net sales | $ 343,043 | $ 256,426 |
Cost of sales | 138,941 | 100,687 |
Gross margin | 204,102 | 155,739 |
Research and development | 70,927 | 48,416 |
TASER | ||
Segment Reporting Information [Line Items] | ||
Net sales | 134,282 | 114,360 |
Cost of sales | 50,763 | 40,625 |
Gross margin | 83,519 | 73,735 |
Research and development | 16,080 | 9,896 |
Software and Sensors | ||
Segment Reporting Information [Line Items] | ||
Net sales | 208,761 | 142,066 |
Cost of sales | 88,178 | 60,062 |
Gross margin | 120,583 | 82,004 |
Research and development | 54,847 | 38,520 |
Product | ||
Segment Reporting Information [Line Items] | ||
Net sales | 219,389 | 176,204 |
Cost of sales | 107,584 | 79,352 |
Product | TASER | ||
Segment Reporting Information [Line Items] | ||
Net sales | 127,081 | 111,154 |
Cost of sales | 50,583 | 40,625 |
Product | Software and Sensors | ||
Segment Reporting Information [Line Items] | ||
Net sales | 92,308 | 65,050 |
Cost of sales | 57,001 | 38,727 |
Service | ||
Segment Reporting Information [Line Items] | ||
Net sales | 123,654 | 80,222 |
Cost of sales | 31,357 | 21,335 |
Service | TASER | ||
Segment Reporting Information [Line Items] | ||
Net sales | 7,201 | 3,206 |
Cost of sales | 180 | 0 |
Service | Software and Sensors | ||
Segment Reporting Information [Line Items] | ||
Net sales | 116,453 | 77,016 |
Cost of sales | $ 31,177 | $ 21,335 |