Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
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, $0.00001 Par Value | |
Trading Symbol | AAXN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 63,475,579 | |
Entity Central Index Key | 0001069183 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 319,253 | $ 172,250 |
Short-term investments | 237,980 | 178,534 |
Accounts and notes receivable, net of allowance of $1,672 and $1,567 as of June 30, 2020 and December 31, 2019, respectively | 154,253 | 146,878 |
Contract assets, net | 50,799 | 38,102 |
Inventory | 81,010 | 38,845 |
Prepaid expenses and other current assets | 42,429 | 34,866 |
Total current assets | 885,724 | 609,475 |
Property and equipment, net | 45,386 | 43,770 |
Deferred tax assets, net | 34,142 | 27,688 |
Intangible assets, net | 11,146 | 12,771 |
Goodwill | 24,905 | 25,013 |
Long-term investments | 129,580 | 45,499 |
Long-term notes receivable, net of current portion | 26,115 | 31,598 |
Long-term contract assets, net | 12,108 | 9,644 |
Other assets | 63,806 | 40,181 |
Total assets | 1,232,912 | 845,639 |
Current liabilities: | ||
Accounts payable | 40,105 | 25,874 |
Accrued liabilities | 64,467 | 45,001 |
Current portion of deferred revenue | 129,518 | 117,864 |
Other current liabilities | 4,882 | 3,853 |
Total current liabilities | 242,830 | 195,566 |
Deferred revenue, net of current portion | 83,150 | 87,936 |
Liability for unrecognized tax benefits | 4,445 | 3,832 |
Long-term deferred compensation | 3,990 | 3,936 |
Deferred tax liability, net | 447 | 354 |
Other long-term liabilities | 28,237 | 10,520 |
Total liabilities | 363,099 | 302,144 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity: | ||
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | ||
Common stock, $0.00001 par value; 200,000,000 shares authorized; 63,468,347 and 59,497,759 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 1 | 1 |
Additional paid-in capital | 883,609 | 528,272 |
Treasury stock at cost, 20,220,227 shares as of June 30, 2020 and December 31, 2019 | (155,947) | (155,947) |
Retained earnings | 144,940 | 172,265 |
Accumulated other comprehensive loss | (2,790) | (1,096) |
Total stockholders' equity | 869,813 | 543,495 |
Total liabilities and stockholders' equity | 1,232,912 | 845,639 |
Current portion of deferred revenue | ||
Current liabilities: | ||
Current portion of deferred revenue | 129,518 | 117,864 |
Customer deposits | ||
Current liabilities: | ||
Current portion of deferred revenue | $ 3,858 | $ 2,974 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance on accounts and notes receivable | $ 1,672 | $ 1,567 |
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) | 63,468,347 | 59,497,759 |
Common stock, shares outstanding (in shares) | 63,468,347 | 59,497,759 |
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 | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Net sales | $ 141,259 | $ 112,362 | $ 288,421 | $ 228,172 |
Cost of sales | 53,082 | 46,802 | 111,636 | 93,695 |
Gross margin | 88,177 | 65,560 | 176,785 | 134,477 |
Operating expenses: | ||||
Sales, general and administrative | 72,293 | 43,362 | 135,320 | 86,254 |
Research and development | 29,560 | 23,493 | 55,941 | 46,847 |
Total operating expenses | 101,853 | 66,855 | 191,261 | 133,101 |
Income (loss) from operations | (13,676) | (1,295) | (14,476) | 1,376 |
Interest and other income, net | 1,613 | 1,845 | 2,554 | 4,158 |
Income (loss) before provision for income taxes | (12,063) | 550 | (11,922) | 5,534 |
Provision for (benefit from) income taxes | 18,696 | (188) | 14,763 | (1,623) |
Net income (loss) | $ (30,759) | $ 738 | $ (26,685) | $ 7,157 |
Net income (loss) per common and common equivalent shares: | ||||
Basic (in dollars per share) | $ (0.51) | $ 0.01 | $ (0.44) | $ 0.12 |
Diluted (in dollars per share) | $ (0.51) | $ 0.01 | $ (0.44) | $ 0.12 |
Weighted average number of common and common equivalent shares outstanding: | ||||
Basic (in shares) | 60,346 | 59,187 | 59,977 | 59,051 |
Diluted (in shares) | 60,346 | 60,000 | 59,977 | 59,876 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | $ (30,759) | $ 738 | $ (26,685) | $ 7,157 |
Foreign currency translation adjustments | 678 | (108) | (1,694) | (58) |
Comprehensive income (loss) | (30,081) | 630 | (28,379) | 7,099 |
Product | ||||
Net sales | 98,755 | 80,391 | 206,043 | 168,480 |
Cost of sales | 43,825 | 38,220 | 92,709 | 77,820 |
Service | ||||
Net sales | 42,504 | 31,971 | 82,378 | 59,692 |
Cost of sales | $ 9,257 | $ 8,582 | $ 18,927 | $ 15,875 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Cumulative Effect, Period of Adoption, AdjustmentRetained Earnings | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Beginning balance (in shares) at Dec. 31, 2018 | 58,810,637 | 20,220,227 | ||||||
Beginning balance at Dec. 31, 2018 | $ 1 | $ 453,400 | $ (155,947) | $ 171,383 | $ (1,513) | $ 467,324 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock under employee plans, net (in shares) | 298,649 | |||||||
Issuance of common stock under employee plans, net | (1,159) | (1,159) | ||||||
Stock-based compensation | 7,905 | 7,905 | ||||||
Net income (loss) | 6,419 | 6,419 | ||||||
Foreign currency translation adjustments | 50 | 50 | ||||||
Ending balance (in shares) at Mar. 31, 2019 | 59,109,286 | 20,220,227 | ||||||
Ending balance at Mar. 31, 2019 | $ 1 | 460,146 | $ (155,947) | 177,802 | (1,463) | 480,539 | ||
Beginning balance (in shares) at Dec. 31, 2018 | 58,810,637 | 20,220,227 | ||||||
Beginning balance at Dec. 31, 2018 | $ 1 | 453,400 | $ (155,947) | 171,383 | (1,513) | 467,324 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 7,157 | |||||||
Foreign currency translation adjustments | (58) | |||||||
Ending balance (in shares) at Jun. 30, 2019 | 59,251,731 | 20,220,227 | ||||||
Ending balance at Jun. 30, 2019 | $ 1 | 467,904 | $ (155,947) | 178,540 | (1,571) | 488,927 | ||
Beginning balance (in shares) at Mar. 31, 2019 | 59,109,286 | 20,220,227 | ||||||
Beginning balance at Mar. 31, 2019 | $ 1 | 460,146 | $ (155,947) | 177,802 | (1,463) | 480,539 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock under employee plans, net (in shares) | 71,832 | |||||||
Issuance of common stock under employee plans, net | (869) | (869) | ||||||
Stock-based compensation | 8,627 | 8,627 | ||||||
Issuance of common stock for business combination (in shares) | 70,613 | |||||||
Net income (loss) | 738 | 738 | ||||||
Foreign currency translation adjustments | (108) | (108) | ||||||
Ending balance (in shares) at Jun. 30, 2019 | 59,251,731 | 20,220,227 | ||||||
Ending balance at Jun. 30, 2019 | $ 1 | 467,904 | $ (155,947) | 178,540 | (1,571) | 488,927 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 59,497,759 | 20,220,227 | ||||||
Beginning balance at Dec. 31, 2019 | $ (640) | $ (640) | $ 1 | 528,272 | $ (155,947) | 172,265 | (1,096) | 543,495 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock under employee plans, net (in shares) | 315,404 | |||||||
Issuance of common stock under employee plans, net | (5,162) | (5,162) | ||||||
Stock-based compensation | 20,195 | 20,195 | ||||||
Net income (loss) | 4,074 | 4,074 | ||||||
Foreign currency translation adjustments | (2,372) | (2,372) | ||||||
Ending balance (in shares) at Mar. 31, 2020 | 59,813,163 | 20,220,227 | ||||||
Ending balance at Mar. 31, 2020 | $ 1 | 543,305 | $ (155,947) | 175,699 | (3,468) | 559,590 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 59,497,759 | 20,220,227 | ||||||
Beginning balance at Dec. 31, 2019 | $ (640) | $ (640) | $ 1 | 528,272 | $ (155,947) | 172,265 | (1,096) | 543,495 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | (26,685) | |||||||
Foreign currency translation adjustments | (1,694) | |||||||
Ending balance (in shares) at Jun. 30, 2020 | 63,468,347 | 20,220,227 | ||||||
Ending balance at Jun. 30, 2020 | $ 1 | 883,609 | $ (155,947) | 144,940 | (2,790) | 869,813 | ||
Beginning balance (in shares) at Mar. 31, 2020 | 59,813,163 | 20,220,227 | ||||||
Beginning balance at Mar. 31, 2020 | $ 1 | 543,305 | $ (155,947) | 175,699 | (3,468) | 559,590 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 3,450,000 | |||||||
Issuance of common stock | 306,779 | 306,779 | ||||||
Issuance of common stock under employee plans, net (in shares) | 134,571 | |||||||
Issuance of common stock under employee plans, net | (310) | (310) | ||||||
Stock-based compensation | 33,835 | 33,835 | ||||||
Issuance of common stock for business combination (in shares) | 70,613 | |||||||
Issuance of common stock for business combination | 0 | |||||||
Net income (loss) | (30,759) | (30,759) | ||||||
Foreign currency translation adjustments | 678 | 678 | ||||||
Ending balance (in shares) at Jun. 30, 2020 | 63,468,347 | 20,220,227 | ||||||
Ending balance at Jun. 30, 2020 | $ 1 | $ 883,609 | $ (155,947) | $ 144,940 | $ (2,790) | $ 869,813 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (26,685) | $ 7,157 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 5,811 | 5,487 |
Loss on disposal and abandonment of intangible assets | 113 | 18 |
Loss on disposal and impairment of property and equipment, net | 1,305 | 1,563 |
Stock-based compensation | 54,030 | 16,532 |
Deferred income taxes | (6,152) | (1,311) |
Unrecognized tax benefits | 612 | 613 |
Other noncash, net | 2,596 | 1,822 |
Provision for expected credit losses | 658 | 0 |
Change in assets and liabilities: | ||
Accounts and notes receivable and contract assets | (9,375) | (11,006) |
Inventory | (43,271) | (7,515) |
Prepaid expenses and other assets | (8,551) | (5,761) |
Accounts payable, accrued and other liabilities | 16,708 | (16,752) |
Deferred revenue | 5,224 | 6,577 |
Net cash used in operating activities | (6,977) | (2,576) |
Cash flows from investing activities: | ||
Purchases of investments | (292,597) | (141,992) |
Proceeds from call / maturity of investments | 158,670 | 25,319 |
Purchases of property and equipment | (7,551) | (7,861) |
Proceeds from disposal of property and equipment | 78 | 0 |
Purchases of intangible assets | (111) | (344) |
Investment in unconsolidated affiliate | (4,700) | 0 |
Net cash used in investing activities | (146,211) | (124,878) |
Cash flows from financing activities: | ||
Net proceeds from equity offering | 306,779 | 0 |
Proceeds from options exercised | 295 | 104 |
Income and payroll tax payments for net-settled stock awards | (5,767) | (2,132) |
Net cash provided by (used in) financing activities | 301,307 | (2,028) |
Effect of exchange rate changes on cash and cash equivalents | (1,115) | (252) |
Net increase (decrease) in cash and cash equivalents | 147,004 | (129,734) |
Cash and cash equivalents and restricted cash, beginning of period | 172,355 | 351,027 |
Cash and cash equivalents and restricted cash, end of period | 319,359 | 221,293 |
Supplemental disclosures: | ||
Cash and cash equivalents | 319,253 | 219,720 |
Restricted cash (Note 1) | 106 | 1,573 |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | 319,359 | 221,293 |
Cash paid for income taxes, net of refunds | 6,327 | 1,331 |
Non-cash transactions | ||
Property and equipment purchases in accounts payable and accrued liabilities | $ 430 | $ 91 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | 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 core mission is to protect life. We fulfill that mission through developing hardware and software products that advance the long term objectives of a) obsoleting the bullet, b) reducing social conflict, and c) enabling a fair and effective justice system. Our headquarters in Scottsdale, Arizona houses our executive management, sales, marketing, certain engineering, manufacturing, and other administrative support functions. We also have a software engineering development center located in Seattle, Washington, and subsidiaries located in Australia, Canada, Finland, Hong Kong, Germany, India, Italy, the Netherlands, the United Kingdom, and Vietnam. The accompanying unaudited condensed consolidated financial statements include the accounts of Axon Enterprise, Inc. and our wholly owned 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, 2019, as filed on Form 10-K, with the exception of our adoption of certain accounting pronouncements which we describe below. 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, 2019. The results of operations for the three months and six months ended June 30, 2020 and 2019 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, ● expected credit loss reserves, ● valuation of goodwill, intangible and long-lived assets, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, ● recognition and measurement of lease liabilities, ● recognition and measurement of contingencies and accrued litigation expense, and ● fair values of identified tangible and intangible assets acquired and liabilities assumed in business combinations. Actual results could differ materially from those estimates. Segment Information Our operations are comprised of two reportable segments: the manufacture and sale of conducted electrical devices ("CEDs"), batteries, accessories, extended warranties and other products and services (the “TASER” segment); and the development, manufacture, and sale of software and sensors, which includes the sale of devices, wearables, applications, cloud and mobile products, and services (collectively, the “Software and Sensors” 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 14. Geographic Information and Major Customers / Suppliers For the three and six months ended June 30, 2020 and 2019, 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 and six months ended June 30, 2020 and 2019, no customer represented more than 10% of total net sales. At June 30, 2020 and December 31, 2019, 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., Canada, China, Israel, Mexico, Republic of Korea, Sri Lanka, and Taiwan. 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 without incurring significant production delays. We also strategically hold safety stock levels on custom components to further reduce this risk. For off the shelf components, we believe that in most cases there are readily available alternative suppliers who can consistently meet our needs for these components. We acquire most of our components on a purchase order basis and do not have any significant long-term contracts with 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 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 June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator for basic and diluted earnings per share: Net income (loss) $ (30,759) $ 738 $ (26,685) $ 7,157 Denominator: Weighted average shares outstanding 60,346 59,187 59,977 59,051 Dilutive effect of stock-based awards — 813 — 825 Diluted weighted average shares outstanding 60,346 60,000 59,977 59,876 Anti-dilutive stock-based awards excluded 12,773 12,056 12,866 12,111 Net income (loss) per common share: Basic $ (0.51) $ 0.01 $ (0.44) $ 0.12 Diluted $ (0.51) $ 0.01 $ (0.44) $ 0.12 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 repair or 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 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 condensed consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Six Months Ended June 30, 2020 2019 Balance, beginning of period $ 1,476 $ 898 Utilization of reserve (350) (250) Warranty expense (benefit) (114) 634 Balance, end of period $ 1,012 $ 1,282 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 June 30, 2020 and December 31, 2019 were comprised of money market funds, certificates of deposit, commercial paper, corporate bonds, corporate notes, municipal bonds, U.S. Government agency bonds, U.S. Treasury bills, U.S. Treasury inflation-protected securities, and U.S. Treasury repurchase agreements. See additional disclosure regarding the fair value of our cash equivalents and investments in Note 3. Included in the balance of other assets as of June 30, 2020 and December 31, 2019 was $4.0 million and $4.2 million, respectively, related to corporate-owned life insurance policies which are used to fund our deferred compensation plan. We determine the fair value of insurance contracts by obtaining the cash surrender value of the contracts from the issuer, a Level 2 valuation technique. In March 2020, we made an investment of $4.7 million in preferred stock and recorded preferred stock warrants at a fair value of $2.6 million, which is also included in the balance of other assets as of June 30, 2020. The estimated fair value of the investments was determined based on Level 3 inputs. As of June 30, 2020, management estimated that the fair value of the investment equaled its carrying value. 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 balance sheet. Restricted Cash Restricted cash balances as of June 30, 2020 and December 31, 2019 included $0.1 million primarily related to funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately half of the balance was included in prepaid expenses and other current assets on our condensed consolidated balance sheets, with the remainder included in other 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. Recently Issued Accounting Guidance Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 includes an impairment model (known as the current expected credit loss model) on financial instruments and other commitments that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The use of forecasted information is intended to incorporate more timely information in the estimate of expected credit loss. This ASU also requires enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as credit quality. Upon adoption, we recorded a noncash cumulative effect adjustment to retained earnings of $0.6 million, net of $0.2 million of income taxes, on the opening consolidated balance sheet as of January 1, 2020, reflecting an overall increase to the allowance for expected credit losses See Notes 3 and 4 for further disclosures related to Topic 326. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendments apply to the disclosures of changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Adoption of this ASU on January 1, 2020 did not have a material impact on our consolidated financial statements. Effective the first quarter of 2021: In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. Adoption of this ASU is not expected to have a material impact on our consolidated financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (a Consensus of the Emerging Issues Task Force). The guidance clarifies the interaction between ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and the ASU on equity method investments. ASU 2016-01 provides companies with an alternative to measure certain equity securities without a readily determinable fair value at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs. ASU 2020-01 clarifies that for purposes of applying the Topic 321 measurement alternative, an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323, immediately before applying or upon discontinuing the equity method. In addition, the new ASU provides direction that a company should not consider whether the underlying securities would be accounted for under the equity method or the fair value option when it is determining the accounting for certain forward contracts and purchased options, upon either settlement or exercise. The amendments in this update become effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, and the amendments are to be applied prospectively. Adoption of this ASU is not expected to have a material impact on our consolidated financial statements. Reclassification of Prior Year Presentation Certain prior year amounts, including the long-term portion of contract assets, 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 | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | 2. Revenues Nature of Products and Services The following tables present our revenues by primary product and service offering (in thousands): Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total TASER 7 $ 11,588 $ — $ 11,588 $ 9,298 $ — $ 9,298 TASER X26P 9,511 — 9,511 10,382 — 10,382 TASER X2 16,832 — 16,832 14,087 — 14,087 TASER Pulse 2,193 — 2,193 1,118 — 1,118 Cartridges 23,772 — 23,772 19,293 — 19,293 Axon Body — 11,844 11,844 — 5,612 5,612 Axon Flex — 680 680 — 1,623 1,623 Axon Fleet — 4,098 4,098 — 3,120 3,120 Axon Dock — 4,055 4,055 — 2,731 2,731 Axon Evidence and cloud services 586 41,891 42,477 109 31,821 31,930 TASER Cam — 512 512 — 1,044 1,044 Extended warranties 5,098 5,735 10,833 4,482 4,420 8,902 Other 910 1,954 2,864 1,803 1,419 3,222 Total $ 70,490 $ 70,769 $ 141,259 $ 60,572 $ 51,790 $ 112,362 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total TASER 7 $ 26,914 $ — $ 26,914 $ 19,252 $ — $ 19,252 TASER X26P 20,572 — 20,572 26,254 — 26,254 TASER X2 30,907 — 30,907 27,172 — 27,172 TASER Pulse 3,393 — 3,393 1,788 — 1,788 Cartridges 50,397 — 50,397 38,453 — 38,453 Axon Body — 24,667 24,667 — 12,057 12,057 Axon Flex — 1,863 1,863 — 2,847 2,847 Axon Fleet — 8,873 8,873 — 6,636 6,636 Axon Dock — 9,006 9,006 — 6,043 6,043 Axon Evidence and cloud services 1,084 81,045 82,129 145 59,439 59,584 TASER Cam — 1,439 1,439 — 1,947 1,947 Extended warranties 10,075 11,193 21,268 8,798 9,350 18,148 Other 3,043 3,950 6,993 4,101 3,890 7,991 Total $ 146,385 $ 142,036 $ 288,421 $ 125,963 $ 102,209 $ 228,172 The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 United States $ 107,547 76 % $ 93,594 83 % $ 225,010 78 % $ 187,927 82 % Other countries 33,712 24 18,768 17 63,411 22 40,245 18 Total $ 141,259 100 % $ 112,362 100 % $ 288,421 100 % $ 228,172 100 % Contract Balances The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the six months ended June 30, 2020 (in thousands): June 30, 2020 Contract assets, net $ 62,907 Contract liabilities (deferred revenue) 212,668 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 86,655 Contract liabilities (deferred revenue) consisted of the following (in thousands): June 30, 2020 December 31, 2019 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 13,162 $ 14,638 $ 27,800 $ 12,716 $ 16,378 $ 29,094 Software and Sensors 11,860 4,021 15,881 9,852 5,156 15,008 25,022 18,659 43,681 22,568 21,534 44,102 Hardware: TASER 12,626 13,110 25,736 9,569 15,468 25,037 Software and Sensors 20,542 37,585 58,127 22,235 33,759 55,994 33,168 50,695 83,863 31,804 49,227 81,031 Services: TASER 528 921 1,449 293 765 1,058 Software and Sensors 70,800 12,875 83,675 63,199 16,410 79,609 71,328 13,796 85,124 63,492 17,175 80,667 Total $ 129,518 $ 83,150 $ 212,668 $ 117,864 $ 87,936 $ 205,800 June 30, 2020 December 31, 2019 Current Long-Term Total Current Long-Term Total TASER $ 26,316 $ 28,669 $ 54,985 $ 22,578 $ 32,611 $ 55,189 Software and Sensors 103,202 54,481 157,683 95,286 55,325 150,611 Total $ 129,518 $ 83,150 $ 212,668 $ 117,864 $ 87,936 $ 205,800 Remaining Performance Obligations As of June 30, 2020, we had approximately $1.34 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 Topic 606 as of June 30, 2020. We expect to recognize between 20% - 25% of this balance over the next twelve months, and generally expect the remainder to be recognized over the following five |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 6 Months Ended |
Jun. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Investments | 3. Cash, Cash Equivalents and Investments The following tables summarize our cash, cash equivalents, and held-to-maturity investments at June 30, 2020 and December 31, 2019 (in thousands): As of June 30, 2020 Gross Gross Cash and Amortized Unrealized Unrealized Cash Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 141,191 $ — $ — $ 141,191 $ 141,191 $ — $ — Level 1: Money market funds 92,773 — — 92,773 92,773 — — Agency bonds 78,965 97 (6) 79,056 — 14,924 64,041 Treasury bills 32,093 1 — 32,094 7,999 24,094 — Subtotal 203,831 98 (6) 203,923 100,772 39,018 64,041 Level 2: State and municipal obligations 55,436 71 (14) 55,493 6,502 40,892 8,042 Certificates of deposit 1,900 — — 1,900 — 1,400 500 Corporate bonds 196,247 515 (113) 196,649 9,102 130,117 57,028 U.S. Treasury repurchase agreements 55,500 — — 55,500 55,500 — — Treasury inflation-protected securities 3,232 29 — 3,261 — 3,232 — Commercial paper 29,616 — — 29,616 6,197 23,419 — Subtotal 341,931 615 (127) 342,419 77,301 199,060 65,570 Total $ 686,953 $ 713 $ (133) $ 687,533 $ 319,264 $ 238,078 $ 129,611 As of June 30, 2020, the balances reflected above were offset by a net payable of $10.4 million related to unsettled investment purchases, which was settled in early July. We believe unrealized losses on our investments are due to interest rate fluctuations. We adopted Topic 326 on January 1, 2020, and applied the credit loss guidance related to held-to-maturity securities prospectively . Because we do not have any history of losses for our held-to-maturity investments, o As of December 31, 2019 Gross Gross Cash and Amortized Unrealized Unrealized Cash Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 103,319 $ — $ — $ 103,319 $ 103,319 $ — $ — Level 1: Money market funds 8,845 — — 8,845 8,845 — — Agency bonds 32,869 14 (4) 32,879 — 15,131 17,738 Subtotal 41,714 14 (4) 41,724 8,845 15,131 17,738 Level 2: State and municipal obligations 25,038 8 — 25,046 — 21,560 3,478 Certificates of deposit 1,400 — — 1,400 — 1,400 — Corporate bonds 135,175 71 (30) 135,216 886 113,241 21,048 U.S. Treasury repurchase agreements 57,200 — — 57,200 57,200 — — Treasury inflation-protected securities 3,235 14 — 3,249 — — 3,235 Commercial paper 29,202 — — 29,202 2,000 27,202 — Subtotal 251,250 93 (30) 251,313 60,086 163,403 27,761 Total $ 396,283 $ 107 $ (34) $ 396,356 $ 172,250 $ 178,534 $ 45,499 |
Expected Credit Losses
Expected Credit Losses | 6 Months Ended |
Jun. 30, 2020 | |
Expected Credit Losses | |
Expected Credit Losses | 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 considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and recorded additional credit loss expense of approximately $0.8 million during the six months ended June 30, 2020. 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): Six Months Ended June 30, 2020 United States Other countries Total Balance, beginning of period $ 1,395 $ 172 $ 1,567 Adoption of Topic 326, cumulative-effect adjustment to retained earnings 767 1 768 Provision for expected credit losses 472 78 550 Amounts written off charged against the allowance (56) (2) (58) Other, including dispositions and foreign currency translation - (12) (12) Balance, end of period $ 2,578 $ 237 $ 2,815 June 30, 2020 Accounts receivable and notes receivable, current $ 1,672 Contract assets, net 608 Long-term notes receivable, net of current portion 535 Total allowance for expected credit losses on customer receivables $ 2,815 |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | 5. Inventory Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost of raw materials, which approximates the first-in, first-out (“FIFO”) method and includes allocations of manufacturing labor and overhead. Included in finished goods at June 30, 2020 and December 31, 2019 was $1.6 million and $1.4 million, respectively, of trial and evaluation hardware units. Provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. Inventory consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Raw materials $ 35,695 $ 20,789 Finished goods 45,315 18,056 Total inventory $ 81,010 $ 38,845 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the six months ended June 30, 2020 were as follows (in thousands): Software and TASER Sensors Total Balance, beginning of period $ 1,354 $ 23,659 $ 25,013 Foreign currency translation adjustments (54) (54) (108) Balance, end of period $ 1,300 $ 23,605 $ 24,905 Intangible assets (other than goodwill) consisted of the following (in thousands): June 30, 2020 December 31, 2019 Gross Net Gross Net Useful Carrying Accumulated Carrying Carrying Accumulated Carrying Life Amount Amortization Amount Amount Amortization Amount Amortizable (definite-lived) intangible assets: Domain names 5 ‑ 10 $ 3,161 $ (1,187) $ 1,974 $ 3,161 $ (1,035) $ 2,126 Issued patents 5 ‑ 25 3,142 (1,453) 1,689 3,271 (1,339) 1,932 Issued trademarks 3 ‑ 15 1,164 (551) 613 1,166 (678) 488 Customer relationships 4 ‑ 8 3,672 (1,635) 2,037 3,721 (1,416) 2,305 Non-compete agreements 3 ‑ 4 448 (411) 37 450 (404) 46 Developed technology 3 ‑ 5 10,660 (7,621) 3,039 10,660 (6,528) 4,132 Re-acquired distribution rights 2 years 1,966 (1,966) — 2,009 (2,009) — Total amortizable 24,213 (14,824) 9,389 24,438 (13,409) 11,029 Non-amortizable (indefinite-lived) intangible assets: TASER trademark 900 900 900 900 Patents and trademarks pending 857 857 842 842 Total non-amortizable 1,757 1,757 1,742 1,742 Total intangible assets $ 25,970 $ (14,824) $ 11,146 $ 26,180 $ (13,409) $ 12,771 Amortization expense of intangible assets for the three and six months ended June 30, 2020 was $0.8 million and $1.7 million, respectively. Amortization expense of intangible assets for the three and six months ended June 30, 2019 was $0.9 million and $1.9 million, respectively. Estimated amortization for intangible assets with definite lives for the remaining six months of 2020, the next five years ended December 31, and thereafter, is as follows (in thousands): 2020 remaining $ 1,655 2021 2,864 2022 1,264 2023 971 2024 891 2025 623 Thereafter 1,121 Total $ 9,389 |
Other Long-Term Assets
Other Long-Term Assets | 6 Months Ended |
Jun. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Long-Term Assets | 7. Other Long-Term Assets Other long-term assets consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Cash surrender value of corporate-owned life insurance policies $ 4,016 $ 4,214 Deferred commissions (1) 23,450 22,068 Restricted cash 56 56 Operating lease assets 23,661 9,653 Investment in unconsolidated affiliate (2) 4,700 — Warrants for unconsolidated affiliate (3) 2,588 — Prepaid expenses, deposits and other 5,335 4,190 Total other long-term assets $ 63,806 $ 40,181 (1) Represents the incremental costs of obtaining contracts with customers, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contracts and amortized consistent with the recognition timing of the revenue for the underlying performance obligations. (2) In March 2020, we made an investment in and entered into a commercial partnership agreement with Flock Group Inc., a provider of advanced security for neighborhoods and law enforcement. Our $4.7 million investment resulted in our ownership of approximately 5% of the outstanding equity interests of this company. We account for this investment under the ASC 321 measurement alternative for equity securities without readily determinable fair values, as there are no quoted market prices for the investment. The investment is measured at cost less impairment, adjusted for observable price changes and is assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. As of June 30, 2020, no impairment was recorded for the investment. (3) In conjunction with the equity investment in and commercial partnership with Flock Group, Inc., we have the ability to commit additional capital over time through warrants where the exercisability and exercise prices are conditional on the achievement of certain partnership performance metrics. The fair value of the preferred stock warrants was estimated at $2.6 million using Monte Carlo simulation. |
Accrued Liabilities
Accrued Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | 8. Accrued Liabilities Accrued liabilities consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Accrued salaries, benefits and bonus $ 18,601 $ 24,737 Accrued professional, consulting and lobbying fees 4,384 3,235 Accrued warranty expense 1,012 1,476 Accrued income and other taxes 17,296 3,362 Other accrued expenses 23,174 12,191 Accrued liabilities $ 64,467 $ 45,001 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. 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, following the tax year to which these filings relate. In July 2020, we received notification from the Internal Revenue Service that the audit of our U.S. federal income tax return for fiscal year 2016 was completed. During the second quarter we began an audit with the State of California for our fiscal year 2016 and 2017 state tax returns, which is currently ongoing. Additionally, we have been notified that an audit will commence for Axon Public Safety Southeast Asia LLC, our entity in Vietnam. The tax period has not yet been defined. On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act is an emergency economic stimulus package in response to the coronavirus outbreak which, among other things, contains numerous income tax provisions. Some of these tax provisions are expected to be effective retroactively for years ending before the date of enactment. We are continuing to evaluate the implications of the CARES Act, but its impact on our financial statements and related disclosures is not expected to be material. In April 2020, recent interpretations of a German law relating to withholding taxes on intellectual property rights emerged. We have evaluated this law and do not expect a material impact to our financial position or results of operations. Deferred Tax Assets Net deferred income tax assets at June 30, 2020, primarily include R&D tax credits, stock-based compensation expense, deferred revenue, accruals and reserves, and net operating losses, partially offset by accelerated depreciation expense and valuation allowance reserve. Our total net deferred tax assets at June 30, 2020 were $33.7 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 provisions 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 June 30, 2020, we continue to demonstrate three-year cumulative pre-tax income in the U.S. federal and state tax jurisdictions; however, we 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. As of June 30, 2020, we have cumulative pre-tax losses in the U.K. and Canada, which limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, a full valuation allowance has been recorded for these jurisdictions. The amount of the deferred tax asset considered realizable, however, could be adjusted in future periods if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for growth. 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 have recorded 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, Arizona, and California 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 $6.9 million as of June 30, 2020. Should the unrecognized benefit of $6.9 million be recognized, our effective tax rate would be favorably impacted. Approximately $2.7 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 six months ended June 30, 2020, after discrete period adjustments, was (123.8%). Before discrete adjustments, the tax rate was (173.8%), which differs from the federal statutory rate, primarily due to the impact of the executive compensation limitation under Internal Revenue Code ("IRC") Section 162(m) on a projected pre-tax loss for the year. The effective tax rate was favorably impacted by a $5.9 million discrete tax benefit primarily associated with windfalls related to stock-based compensation for restricted stock units (“RSUs”) that vested or stock options that were exercised during the six months ended June 30, 2020. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 10. Stockholders’ Equity Follow-on offering In June 2020, we sold 3,450,000 shares of our common stock, which included 450,000 shares pursuant to the full exercise of the underwriters' option to purchase additional shares, in an underwritten public offering at a price of $92.00 per share, which resulted in gross proceeds of $317.4 million. Net proceeds to us after deducting fees, commissions, and other expenses related to the offering were $306.8 million. Performance-based stock awards We have issued performance-based stock options and performance-based RSUs, the vesting of which is generally contingent upon the achievement of certain performance criteria related to our operating performance, as well as successful and timely development and market acceptance of future product introductions. In addition, certain of the performance RSUs have additional service requirements subsequent to the achievement of the performance criteria. Compensation expense is recognized over the requisite service period, which is defined as the longest explicit, implicit or derived service period based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. For both service-based and performance-based RSUs, we account for forfeitures as they occur as a reduction to stock-based compensation expense and additional paid-in-capital. For performance-based options with a vesting schedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized for each pair of performance and market conditions over the longer of the expected achievement period of the performance and market conditions, beginning at the point in time that the relevant performance condition is considered probable of achievement. The fair value of such awards is estimated on the grant date using Monte Carlo simulations. 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 vesting date. Each of the 12 vesting tranches of the CEO Performance Award have a 10-year Eight Separate Adjusted EBITDA (CEO Eight Separate Revenue Goals (1) Performance Award) Goals (in thousands) (in thousands) Goal #1, $710,058 Goal #9, $125,000 Goal #2, $860,058 Goal #10, $155,000 Goal #3, $1,010,058 Goal #11, $175,000 Goal #4, $1,210,058 Goal #12, $190,000 Goal #5, $1,410,058 Goal #13, $200,000 Goal #6, $1,610,058 Goal #14, $210,000 Goal #7, $1,810,058 Goal #15, $220,000 Goal #8, $2,010,058 Goal #16, $230,000 (1) In connection with the business acquisition that was completed during the three months ended June 30, 2018, the revenue goals were adjusted for the acquiree’s Target Revenue, as defined in the CEO Performance Award agreement. As of June 30, 2020, the following operational goals were considered probable of achievement: ● Total revenue of $710.1 million, $860.1 million, and $1,010.1 million; and ● Adjusted EBITDA (CEO Performance Award) of $125.0 million, $155.0 million, $175.0 million, $190.0 million, $200.0 million, $210.0 million, $220.0 million, and $230.0 million. The first three market capitalization goals have been achieved as of June 30, 2020. However, none of the stock options granted under the CEO Performance Award have vested thus far as the operational goals have not yet been achieved as of June 30, 2020. As there are eleven operational goals considered probable of achievement, we recorded stock-based compensation expense of $60.5 million related to the CEO Performance Award from the Grant Date through June 30, 2020. The number of stock options that would vest related to the eleven tranches is approximately 5.8 million shares. As of June 30, 2020, we had $167.9 million of total unrecognized stock-based compensation expense for the performance goals that were considered probable of achievement, which will be recognized over a weighted-average period of 5.31 years. As of June 30, 2020, we had unrecognized stock-based compensation expense of $17.6 million for the performance goals that were considered not probable of achievement. 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. During the three and six months ended June 30, 2020, we granted an additional 0.1 million and 0.2 million XSUs, respectively. The XSUs are grants of 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. 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. New shares issued for any other reasons, including shares issued upon vesting of XSUs, RSUs, and PSUs as well as shares issued to raise capital through equity issuances or in other transactions, do not increase the XSU Maximum. 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 June 30, 2020, actual shares outstanding exceeded the XSU Maximum as a result of the common stock offering completed in June 2020. 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 three market capitalization goals have been achieved as of June 30, 2020. However, none of the XSU tranches have vested thus far as the operational goals have not yet been achieved as of June 30, 2020. As there are eleven operational goals considered probable of achievement, we recorded stock-based compensation expense of $33.8 million related to the XSU awards from their respective grant dates through June 30, 2020. The number of XSU awards that would vest related to the eleven tranches is approximately 5.0 million shares. As of June 30, 2020, we had $148.1 million of total unrecognized stock-based compensation expense for the performance goals that were considered probable of achievement, which will be recognized over a weighted-average period of 5.12 years. As of June 30, 2020, we had unrecognized stock-based compensation expense of $11.4 million for the performance goals that were considered not probable of achievement. Restricted Stock Units The following table summarizes RSU activity for the six months ended June 30, 2020 (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 1,249 $ 45.47 Granted 189 74.44 Released (303) 36.90 Forfeited (68) 46.85 Units outstanding, end of period 1,067 52.93 $ 104,743 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $98.13 per share, multiplied by the number of RSUs outstanding. As of June 30, 2020, there was $42.4 million in unrecognized compensation costs related to RSUs under our stock plans for shares that are expected to vest. We expect to recognize the cost related to the RSUs over a weighted average period of 2.04 years. RSUs are released when vesting requirements are met. Certain RSUs that vested in the six months ended June 30, 2020 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 0.1 million and had a value of $4.6 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 Performance Stock Units (“PSUs”) activity, inclusive of XSUs, for the six months ended June 30, 2020 (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 6,033 $ 34.47 Granted 229 49.90 Released (158) 24.88 Forfeited (303) 36.10 Units outstanding, end of period 5,801 35.26 $ 569,207 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $98.13 per share, multiplied by the number of PSUs outstanding. As of June 30, 2020, there was $152.6 million in unrecognized compensation costs related to PSUs under our stock plans for shares that are expected to vest. We expect to recognize the cost related to the PSUs over a weighted average period of 5.03 years. PSUs are released when vesting requirements are met. As of June 30, 2020, the performance criteria had been met for approximately 0.1 million of the 5.8 million PSUs outstanding. Certain of the PSUs outstanding as of June 30, 2020 can vest with a range of shares earned being between 0% and 200% of the targeted shares granted, depending on the final achievement of pre-determined performance criteria as of the vesting date. The amount of PSUs included in the table above related to such grants is the target level. The maximum additional number of PSUs that could be earned is 0.2 million, which are not included in the table above. Certain PSUs that vested in the six months ended June 30, 2020 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 approximately 16 thousand and had a value of $1.2 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. Stock Option Activity The following table summarizes stock option activity for the six months ended June 30, 2020 (number of units 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 6,431 $ 28.34 Granted — — Exercised (65) 4.52 Expired / terminated — — Options outstanding, end of period 6,366 28.58 7.66 $ 442,748 Options exercisable, end of period 1 4.70 0.51 3 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 $98.13 on June 30, 2020. The intrinsic value of options exercised for the six months ended June 30, 2020 and 2019 was $5.1 million and $1.1 million, respectively. As of June 30, 2020, total options outstanding included 6.4 million unvested performance-based stock options. Of this total, 5.8 million options relate to tranches of the CEO Performance Award considered probable of achievement. Stock-based Compensation Expense The following table summarizes the composition of stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Cost of products sold and services delivered $ 836 $ 237 $ 1,426 $ 463 Sales, general and administrative expenses 26,766 4,941 41,736 9,622 Research and development expenses 6,233 3,449 10,868 6,447 Total stock-based compensation expense $ 33,835 $ 8,627 $ 54,030 $ 16,532 Stock Incentive Plan In February 2019, our shareholders approved the 2019 Plan authorizing an additional 6.0 million shares, plus remaining available shares under prior plans, for issuance under the new plan. Combined with the legacy stock incentive plans, there are 2.0 million shares available for grant as of June 30, 2020. 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 six months ended June 30, 2020 and 2019, no common shares were purchased under the program. As of June 30, 2020, $16.3 million remains available under the plan for future purchases. Any future purchases will be discretionary. |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Line of Credit | 11. Line of Credit We have a $50.0 million unsecured revolving line of credit with a domestic bank, of which $10.0 million is available for letters of credit. The credit agreement matures on December 31, 2021 and has an accordion feature which allows for an increase in the total line of credit up to $100.0 million, subject to certain conditions, including the availability of additional bank commitments. At June 30, 2020 and December 31, 2019, 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 June 30, 2020, we had letters of credit outstanding of approximately $6.1 million under the facility and available borrowing of $43.9 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at LIBOR plus 1.0 to 1.5% per year determined in accordance with a pricing grid based on our funded debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio. We are required to comply with a maximum funded debt to EBITDA ratio of no greater than 2.50 to 1.00 based upon a trailing four fiscal quarter period. At June 30, 2020, our funded debt to EBITDA ratio was 0.0001 to 1.00. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. 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 eight 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. Other Litigation We are a defendant in a consumer class action lawsuit filed in the District of Nevada on April 9, 2019 by Douglas Richey (“Richey”). The case alleges the TASER Pulse, X2 and X26P CEDs have a faulty safety switch based on Richey’s Pulse allegedly discharging inside its neoprene case in a jacket pocket without injury. Any such discharge was likely due to static electricity, as disclosed in our consumer warnings. The nationwide class allegations have been withdrawn and any applicable class is limited to California purchasers. We are vigorously defending this suit and the propriety of any class certification. 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 enforcement action on January 3, 2020 regarding Axon’s May 2018 acquisition of Vievu LLC from Safariland LLC. The FTC alleges the merger was anticompetitive and adversely affected the body worn camera (“BWC”) and digital evidence management systems (“DEMS”) market for “large metropolitan police departments.” The stay of the administrative proceedings due to the COVID-19 pandemic lifted July 7 and discovery is underway. The hearing has been reset for October 13, 2020. If successful, the FTC may require us to divest Vievu and other assets or take other remedial measures, any of which could be material to Axon. We are vigorously defending the matter. At this time, we cannot predict the eventual scope, duration, or outcome of this request and accordingly we have not recorded any liability in the accompanying condensed consolidated financial statements. Also, on January 3, 2020, we sued the FTC in the U.S. District of Arizona for declaratory and injunctive relief alleging the FTC’s structure and administrative processes violate Article II of the U.S. Constitution and our Fifth Amendment rights to due process and equal protection. On April 8, 2020, the district court dismissed the action, without prejudice, for lack of jurisdiction, requiring Axon to first bring its constitutional claims in the administrative case. Axon has appealed that ruling to the Ninth Circuit (No. 20-15662), which granted expedited consideration and heard oral argument on July 17. The matter is now under advisement. In parallel to these matters, we are evaluating strategic alternatives to litigation, which we might pursue if determined to be in the best interests of shareholders and customers. This could include a divestiture of the Vievu entity and/or related assets and the licensure of certain intellectual and other intangible property. While we continue to believe the acquisition of Vievu in 2018 was lawful and a benefit to Vievu's customers, the cost, risk and distraction of protracted litigation merit consideration of settlement if achievable on terms agreeable to the FTC and us. 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. It is our policy to not disclose the specifics of any claim or threatened lawsuit until the summons and complaint are actually served on 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 amount of the loss or range of possible losses for the claim, if material for disclosure. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing, the availability of insurance, and the severity of any potential loss. We reevaluate and update accruals as matters progress over time. Based on our assessment of outstanding litigation and claims as of June 30, 2020, we have determined that it is not reasonably possible 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 June 30, 2020, we had outstanding letters of credit of $6.1 million that are expected to expire in June 2021 and September 2021. We also had outstanding letters of credit and bank guarantees of $1.9 million that do not draw against our credit facility. The outstanding letters of credit are expected to expire in June 2021. Additionally, we had $24.0 million of outstanding surety bonds at June 30, 2020, with $0.5 million expiring in 2020, $2.3 million expiring in 2021, $3.2 million expiring in 2022, $7.5 million expiring in 2023 and the remaining $10.5 million expiring in 2024. |
Employee Benefit Plans
Employee Benefit Plans | 6 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | 13. Employee Benefit Plans We have a defined contribution 401(k) plan for eligible employees, which is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. Employees are entitled to make tax-deferred contributions of up to the maximum amount allowed by law of their eligible compensation. We also have a non-qualified deferred compensation plan for certain executives, employees and non-employee directors through which participants may elect to postpone the receipt and taxation of a portion of their compensation, including stock-based compensation, received from us. The non-qualified deferred compensation plan allows eligible participants to defer up to 80% of their base salary and up to 100% of other types of compensation. The plan also allows for matching and discretionary employer contributions. Employee deferrals are deemed 100% vested upon contribution. Distributions from the plan are made upon retirement, death, separation of service, specified date or upon the occurrence of an unforeseeable emergency. Distributions can be paid in a variety of forms from lump sum to installments over a period of years. Participants in the plan are entitled to select from a wide variety of investments available under the plan and are allocated gains or losses based upon the performance of the investments selected by the participant. All gains or losses are allocated fully to plan participants and we do not guarantee a rate of return on deferred balances. Assets related to this plan consist of corporate-owned life insurance contracts and are included in other assets in the condensed consolidated balance sheets; see Note 7 for balances. Participants have no rights or claims with respect to any plan assets and any such assets are subject to the claims of our general creditors. Contributions to the plans are made by both the employee and us. Our contributions to the 401(k) plan are based on the level of employee contributions and are immediately vested. Future matching contributions to the plans are at our sole discretion. We also sponsor defined contribution plans in Australia, Finland, and the United Kingdom. Our matching contributions for all defined contribution plans were $1.3 million and $1.1 million for the three months ended June 30, 2020 and 2019, respectively and $2.8 million and $2.5 million for the six months ended June 30, 2020 and 2019, respectively. |
Segment Data
Segment Data | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Data | 14. Segment Data Our operations are comprised of two reportable segments: the manufacture and sale of CEDs, batteries, accessories, extended warranties and other products and services (the “TASER” segment); and the software and sensors business, which includes the sale of devices, wearables, applications, cloud and mobile products, and services (collectively, the “Software and Sensors” 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." Our Chief Executive Officer, who is the CODM, is not provided asset information or sales, general, and administrative expense by segment. Information relative to our reportable segments was as follows (in thousands): Three Months Ended June 30, 2020 Three Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 69,877 $ 28,878 $ 98,755 $ 60,423 $ 19,968 $ 80,391 Net sales from services 613 41,891 42,504 149 31,822 31,971 Net sales 70,490 70,769 141,259 60,572 51,790 112,362 Cost of product sales 27,242 16,583 43,825 24,262 13,958 38,220 Cost of service sales — 9,257 9,257 — 8,582 8,582 Cost of sales 27,242 25,840 53,082 24,262 22,540 46,802 Gross margin $ 43,248 $ 44,929 $ 88,177 $ 36,310 $ 29,250 $ 65,560 Research and development $ 3,762 $ 25,798 $ 29,560 $ 3,087 $ 20,406 $ 23,493 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 145,052 60,991 $ 206,043 $ 125,724 $ 42,756 $ 168,480 Net sales from services 1,333 81,045 82,378 239 59,453 59,692 Net sales 146,385 142,036 288,421 125,963 102,209 228,172 Cost of product sales 57,490 35,219 92,709 47,540 30,280 77,820 Cost of service sales — 18,927 18,927 — 15,875 15,875 Cost of sales 57,490 54,146 111,636 47,540 46,155 93,695 Gross margin $ 88,895 $ 87,890 $ 176,785 $ 78,423 $ 56,054 $ 134,477 Research and development $ 6,794 $ 49,147 $ 55,941 $ 6,799 $ 40,048 $ 46,847 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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, 2019, as filed on Form 10-K, with the exception of our adoption of certain accounting pronouncements which we describe below. 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, 2019. The results of operations for the three months and six months ended June 30, 2020 and 2019 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, ● expected credit loss reserves, ● valuation of goodwill, intangible and long-lived assets, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, ● recognition and measurement of lease liabilities, ● recognition and measurement of contingencies and accrued litigation expense, and ● fair values of identified tangible and intangible assets acquired and liabilities assumed in business combinations. Actual results could differ materially from those estimates. |
Segment Information | Segment Information Our operations are comprised of two reportable segments: the manufacture and sale of conducted electrical devices ("CEDs"), batteries, accessories, extended warranties and other products and services (the “TASER” segment); and the development, manufacture, and sale of software and sensors, which includes the sale of devices, wearables, applications, cloud and mobile products, and services (collectively, the “Software and Sensors” 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 14. |
Geographic Information and Major Customers / Suppliers | Geographic Information and Major Customers / Suppliers For the three and six months ended June 30, 2020 and 2019, 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 and six months ended June 30, 2020 and 2019, no customer represented more than 10% of total net sales. At June 30, 2020 and December 31, 2019, 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., Canada, China, Israel, Mexico, Republic of Korea, Sri Lanka, and Taiwan. 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 without incurring significant production delays. We also strategically hold safety stock levels on custom components to further reduce this risk. For off the shelf components, we believe that in most cases there are readily available alternative suppliers who can consistently meet our needs for these components. We acquire most of our components on a purchase order basis and do not have any significant long-term contracts with 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 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 June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator for basic and diluted earnings per share: Net income (loss) $ (30,759) $ 738 $ (26,685) $ 7,157 Denominator: Weighted average shares outstanding 60,346 59,187 59,977 59,051 Dilutive effect of stock-based awards — 813 — 825 Diluted weighted average shares outstanding 60,346 60,000 59,977 59,876 Anti-dilutive stock-based awards excluded 12,773 12,056 12,866 12,111 Net income (loss) per common share: Basic $ (0.51) $ 0.01 $ (0.44) $ 0.12 Diluted $ (0.51) $ 0.01 $ (0.44) $ 0.12 |
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 repair or 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 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 condensed consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Six Months Ended June 30, 2020 2019 Balance, beginning of period $ 1,476 $ 898 Utilization of reserve (350) (250) Warranty expense (benefit) (114) 634 Balance, end of period $ 1,012 $ 1,282 |
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 June 30, 2020 and December 31, 2019 were comprised of money market funds, certificates of deposit, commercial paper, corporate bonds, corporate notes, municipal bonds, U.S. Government agency bonds, U.S. Treasury bills, U.S. Treasury inflation-protected securities, and U.S. Treasury repurchase agreements. See additional disclosure regarding the fair value of our cash equivalents and investments in Note 3. Included in the balance of other assets as of June 30, 2020 and December 31, 2019 was $4.0 million and $4.2 million, respectively, related to corporate-owned life insurance policies which are used to fund our deferred compensation plan. We determine the fair value of insurance contracts by obtaining the cash surrender value of the contracts from the issuer, a Level 2 valuation technique. In March 2020, we made an investment of $4.7 million in preferred stock and recorded preferred stock warrants at a fair value of $2.6 million, which is also included in the balance of other assets as of June 30, 2020. The estimated fair value of the investments was determined based on Level 3 inputs. As of June 30, 2020, management estimated that the fair value of the investment equaled its carrying value. 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 balance sheet. |
Restricted cash | Restricted Cash Restricted cash balances as of June 30, 2020 and December 31, 2019 included $0.1 million primarily related to funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately half of the balance was included in prepaid expenses and other current assets on our condensed consolidated balance sheets, with the remainder included in other assets. |
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. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 includes an impairment model (known as the current expected credit loss model) on financial instruments and other commitments that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The use of forecasted information is intended to incorporate more timely information in the estimate of expected credit loss. This ASU also requires enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as credit quality. Upon adoption, we recorded a noncash cumulative effect adjustment to retained earnings of $0.6 million, net of $0.2 million of income taxes, on the opening consolidated balance sheet as of January 1, 2020, reflecting an overall increase to the allowance for expected credit losses See Notes 3 and 4 for further disclosures related to Topic 326. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendments apply to the disclosures of changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Adoption of this ASU on January 1, 2020 did not have a material impact on our consolidated financial statements. Effective the first quarter of 2021: In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The amendments in the ASU are effective for fiscal years beginning after December 15, 2020, including interim periods therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. Adoption of this ASU is not expected to have a material impact on our consolidated financial statements. In January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (a Consensus of the Emerging Issues Task Force). The guidance clarifies the interaction between ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and the ASU on equity method investments. ASU 2016-01 provides companies with an alternative to measure certain equity securities without a readily determinable fair value at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs. ASU 2020-01 clarifies that for purposes of applying the Topic 321 measurement alternative, an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323, immediately before applying or upon discontinuing the equity method. In addition, the new ASU provides direction that a company should not consider whether the underlying securities would be accounted for under the equity method or the fair value option when it is determining the accounting for certain forward contracts and purchased options, upon either settlement or exercise. The amendments in this update become effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted, and the amendments are to be applied prospectively. Adoption of this ASU is not expected to have a material impact on our consolidated financial statements. |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior year amounts, including the long-term portion of contract assets, 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) | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Weighted Average Number of Shares Outstanding and Income Per Share | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator for basic and diluted earnings per share: Net income (loss) $ (30,759) $ 738 $ (26,685) $ 7,157 Denominator: Weighted average shares outstanding 60,346 59,187 59,977 59,051 Dilutive effect of stock-based awards — 813 — 825 Diluted weighted average shares outstanding 60,346 60,000 59,977 59,876 Anti-dilutive stock-based awards excluded 12,773 12,056 12,866 12,111 Net income (loss) per common share: Basic $ (0.51) $ 0.01 $ (0.44) $ 0.12 Diluted $ (0.51) $ 0.01 $ (0.44) $ 0.12 |
Summary of Changes in Estimated Product Warranty Liabilities | Changes in our estimated product warranty liabilities were as follows (in thousands): Six Months Ended June 30, 2020 2019 Balance, beginning of period $ 1,476 $ 898 Utilization of reserve (350) (250) Warranty expense (benefit) (114) 634 Balance, end of period $ 1,012 $ 1,282 |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
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 June 30, 2020 Three Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total TASER 7 $ 11,588 $ — $ 11,588 $ 9,298 $ — $ 9,298 TASER X26P 9,511 — 9,511 10,382 — 10,382 TASER X2 16,832 — 16,832 14,087 — 14,087 TASER Pulse 2,193 — 2,193 1,118 — 1,118 Cartridges 23,772 — 23,772 19,293 — 19,293 Axon Body — 11,844 11,844 — 5,612 5,612 Axon Flex — 680 680 — 1,623 1,623 Axon Fleet — 4,098 4,098 — 3,120 3,120 Axon Dock — 4,055 4,055 — 2,731 2,731 Axon Evidence and cloud services 586 41,891 42,477 109 31,821 31,930 TASER Cam — 512 512 — 1,044 1,044 Extended warranties 5,098 5,735 10,833 4,482 4,420 8,902 Other 910 1,954 2,864 1,803 1,419 3,222 Total $ 70,490 $ 70,769 $ 141,259 $ 60,572 $ 51,790 $ 112,362 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total TASER 7 $ 26,914 $ — $ 26,914 $ 19,252 $ — $ 19,252 TASER X26P 20,572 — 20,572 26,254 — 26,254 TASER X2 30,907 — 30,907 27,172 — 27,172 TASER Pulse 3,393 — 3,393 1,788 — 1,788 Cartridges 50,397 — 50,397 38,453 — 38,453 Axon Body — 24,667 24,667 — 12,057 12,057 Axon Flex — 1,863 1,863 — 2,847 2,847 Axon Fleet — 8,873 8,873 — 6,636 6,636 Axon Dock — 9,006 9,006 — 6,043 6,043 Axon Evidence and cloud services 1,084 81,045 82,129 145 59,439 59,584 TASER Cam — 1,439 1,439 — 1,947 1,947 Extended warranties 10,075 11,193 21,268 8,798 9,350 18,148 Other 3,043 3,950 6,993 4,101 3,890 7,991 Total $ 146,385 $ 142,036 $ 288,421 $ 125,963 $ 102,209 $ 228,172 The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 United States $ 107,547 76 % $ 93,594 83 % $ 225,010 78 % $ 187,927 82 % Other countries 33,712 24 18,768 17 63,411 22 40,245 18 Total $ 141,259 100 % $ 112,362 100 % $ 288,421 100 % $ 228,172 100 % |
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 six months ended June 30, 2020 (in thousands): June 30, 2020 Contract assets, net $ 62,907 Contract liabilities (deferred revenue) 212,668 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 86,655 Contract liabilities (deferred revenue) consisted of the following (in thousands): June 30, 2020 December 31, 2019 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 13,162 $ 14,638 $ 27,800 $ 12,716 $ 16,378 $ 29,094 Software and Sensors 11,860 4,021 15,881 9,852 5,156 15,008 25,022 18,659 43,681 22,568 21,534 44,102 Hardware: TASER 12,626 13,110 25,736 9,569 15,468 25,037 Software and Sensors 20,542 37,585 58,127 22,235 33,759 55,994 33,168 50,695 83,863 31,804 49,227 81,031 Services: TASER 528 921 1,449 293 765 1,058 Software and Sensors 70,800 12,875 83,675 63,199 16,410 79,609 71,328 13,796 85,124 63,492 17,175 80,667 Total $ 129,518 $ 83,150 $ 212,668 $ 117,864 $ 87,936 $ 205,800 June 30, 2020 December 31, 2019 Current Long-Term Total Current Long-Term Total TASER $ 26,316 $ 28,669 $ 54,985 $ 22,578 $ 32,611 $ 55,189 Software and Sensors 103,202 54,481 157,683 95,286 55,325 150,611 Total $ 129,518 $ 83,150 $ 212,668 $ 117,864 $ 87,936 $ 205,800 |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Summary of Cash, Cash Equivalents and Held-to-Maturity Investments by Type | The following tables summarize our cash, cash equivalents, and held-to-maturity investments at June 30, 2020 and December 31, 2019 (in thousands): As of June 30, 2020 Gross Gross Cash and Amortized Unrealized Unrealized Cash Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 141,191 $ — $ — $ 141,191 $ 141,191 $ — $ — Level 1: Money market funds 92,773 — — 92,773 92,773 — — Agency bonds 78,965 97 (6) 79,056 — 14,924 64,041 Treasury bills 32,093 1 — 32,094 7,999 24,094 — Subtotal 203,831 98 (6) 203,923 100,772 39,018 64,041 Level 2: State and municipal obligations 55,436 71 (14) 55,493 6,502 40,892 8,042 Certificates of deposit 1,900 — — 1,900 — 1,400 500 Corporate bonds 196,247 515 (113) 196,649 9,102 130,117 57,028 U.S. Treasury repurchase agreements 55,500 — — 55,500 55,500 — — Treasury inflation-protected securities 3,232 29 — 3,261 — 3,232 — Commercial paper 29,616 — — 29,616 6,197 23,419 — Subtotal 341,931 615 (127) 342,419 77,301 199,060 65,570 Total $ 686,953 $ 713 $ (133) $ 687,533 $ 319,264 $ 238,078 $ 129,611 As of December 31, 2019 Gross Gross Cash and Amortized Unrealized Unrealized Cash Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Investments Investments Cash $ 103,319 $ — $ — $ 103,319 $ 103,319 $ — $ — Level 1: Money market funds 8,845 — — 8,845 8,845 — — Agency bonds 32,869 14 (4) 32,879 — 15,131 17,738 Subtotal 41,714 14 (4) 41,724 8,845 15,131 17,738 Level 2: State and municipal obligations 25,038 8 — 25,046 — 21,560 3,478 Certificates of deposit 1,400 — — 1,400 — 1,400 — Corporate bonds 135,175 71 (30) 135,216 886 113,241 21,048 U.S. Treasury repurchase agreements 57,200 — — 57,200 57,200 — — Treasury inflation-protected securities 3,235 14 — 3,249 — — 3,235 Commercial paper 29,202 — — 29,202 2,000 27,202 — Subtotal 251,250 93 (30) 251,313 60,086 163,403 27,761 Total $ 396,283 $ 107 $ (34) $ 396,356 $ 172,250 $ 178,534 $ 45,499 |
Expected Credit Losses (Tables)
Expected Credit Losses (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
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): Six Months Ended June 30, 2020 United States Other countries Total Balance, beginning of period $ 1,395 $ 172 $ 1,567 Adoption of Topic 326, cumulative-effect adjustment to retained earnings 767 1 768 Provision for expected credit losses 472 78 550 Amounts written off charged against the allowance (56) (2) (58) Other, including dispositions and foreign currency translation - (12) (12) Balance, end of period $ 2,578 $ 237 $ 2,815 |
Schedule of allowance for expected credit losses for each type of customer receivable | June 30, 2020 Accounts receivable and notes receivable, current $ 1,672 Contract assets, net 608 Long-term notes receivable, net of current portion 535 Total allowance for expected credit losses on customer receivables $ 2,815 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill for the six months ended June 30, 2020 were as follows (in thousands): Software and TASER Sensors Total Balance, beginning of period $ 1,354 $ 23,659 $ 25,013 Foreign currency translation adjustments (54) (54) (108) Balance, end of period $ 1,300 $ 23,605 $ 24,905 |
Indefinite-Lived Intangible Assets Other than Goodwill | Intangible assets (other than goodwill) consisted of the following (in thousands): June 30, 2020 December 31, 2019 Gross Net Gross Net Useful Carrying Accumulated Carrying Carrying Accumulated Carrying Life Amount Amortization Amount Amount Amortization Amount Amortizable (definite-lived) intangible assets: Domain names 5 ‑ 10 $ 3,161 $ (1,187) $ 1,974 $ 3,161 $ (1,035) $ 2,126 Issued patents 5 ‑ 25 3,142 (1,453) 1,689 3,271 (1,339) 1,932 Issued trademarks 3 ‑ 15 1,164 (551) 613 1,166 (678) 488 Customer relationships 4 ‑ 8 3,672 (1,635) 2,037 3,721 (1,416) 2,305 Non-compete agreements 3 ‑ 4 448 (411) 37 450 (404) 46 Developed technology 3 ‑ 5 10,660 (7,621) 3,039 10,660 (6,528) 4,132 Re-acquired distribution rights 2 years 1,966 (1,966) — 2,009 (2,009) — Total amortizable 24,213 (14,824) 9,389 24,438 (13,409) 11,029 Non-amortizable (indefinite-lived) intangible assets: TASER trademark 900 900 900 900 Patents and trademarks pending 857 857 842 842 Total non-amortizable 1,757 1,757 1,742 1,742 Total intangible assets $ 25,970 $ (14,824) $ 11,146 $ 26,180 $ (13,409) $ 12,771 |
Finite-Lived Intangible Assets Other than Goodwill | Intangible assets (other than goodwill) consisted of the following (in thousands): June 30, 2020 December 31, 2019 Gross Net Gross Net Useful Carrying Accumulated Carrying Carrying Accumulated Carrying Life Amount Amortization Amount Amount Amortization Amount Amortizable (definite-lived) intangible assets: Domain names 5 ‑ 10 $ 3,161 $ (1,187) $ 1,974 $ 3,161 $ (1,035) $ 2,126 Issued patents 5 ‑ 25 3,142 (1,453) 1,689 3,271 (1,339) 1,932 Issued trademarks 3 ‑ 15 1,164 (551) 613 1,166 (678) 488 Customer relationships 4 ‑ 8 3,672 (1,635) 2,037 3,721 (1,416) 2,305 Non-compete agreements 3 ‑ 4 448 (411) 37 450 (404) 46 Developed technology 3 ‑ 5 10,660 (7,621) 3,039 10,660 (6,528) 4,132 Re-acquired distribution rights 2 years 1,966 (1,966) — 2,009 (2,009) — Total amortizable 24,213 (14,824) 9,389 24,438 (13,409) 11,029 Non-amortizable (indefinite-lived) intangible assets: TASER trademark 900 900 900 900 Patents and trademarks pending 857 857 842 842 Total non-amortizable 1,757 1,757 1,742 1,742 Total intangible assets $ 25,970 $ (14,824) $ 11,146 $ 26,180 $ (13,409) $ 12,771 |
Estimated Amortization Expense of Intangible Assets | Estimated amortization for intangible assets with definite lives for the remaining six months of 2020, the next five years ended December 31, and thereafter, is as follows (in thousands): |
Other Long-Term Assets (Tables)
Other Long-Term Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Long-Term Assets | Other long-term assets consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Cash surrender value of corporate-owned life insurance policies $ 4,016 $ 4,214 Deferred commissions (1) 23,450 22,068 Restricted cash 56 56 Operating lease assets 23,661 9,653 Investment in unconsolidated affiliate (2) 4,700 — Warrants for unconsolidated affiliate (3) 2,588 — Prepaid expenses, deposits and other 5,335 4,190 Total other long-term assets $ 63,806 $ 40,181 (1) Represents the incremental costs of obtaining contracts with customers, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contracts and amortized consistent with the recognition timing of the revenue for the underlying performance obligations. (2) In March 2020, we made an investment in and entered into a commercial partnership agreement with Flock Group Inc., a provider of advanced security for neighborhoods and law enforcement. Our $4.7 million investment resulted in our ownership of approximately 5% of the outstanding equity interests of this company. We account for this investment under the ASC 321 measurement alternative for equity securities without readily determinable fair values, as there are no quoted market prices for the investment. The investment is measured at cost less impairment, adjusted for observable price changes and is assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. As of June 30, 2020, no impairment was recorded for the investment. (3) In conjunction with the equity investment in and commercial partnership with Flock Group, Inc., we have the ability to commit additional capital over time through warrants where the exercisability and exercise prices are conditional on the achievement of certain partnership performance metrics. The fair value of the preferred stock warrants was estimated at $2.6 million using Monte Carlo simulation. |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued liabilities consisted of the following at June 30, 2020 and December 31, 2019 (in thousands): June 30, 2020 December 31, 2019 Accrued salaries, benefits and bonus $ 18,601 $ 24,737 Accrued professional, consulting and lobbying fees 4,384 3,235 Accrued warranty expense 1,012 1,476 Accrued income and other taxes 17,296 3,362 Other accrued expenses 23,174 12,191 Accrued liabilities $ 64,467 $ 45,001 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Equity Compensation Goals | Eight Separate Adjusted EBITDA (CEO Eight Separate Revenue Goals (1) Performance Award) Goals (in thousands) (in thousands) Goal #1, $710,058 Goal #9, $125,000 Goal #2, $860,058 Goal #10, $155,000 Goal #3, $1,010,058 Goal #11, $175,000 Goal #4, $1,210,058 Goal #12, $190,000 Goal #5, $1,410,058 Goal #13, $200,000 Goal #6, $1,610,058 Goal #14, $210,000 Goal #7, $1,810,058 Goal #15, $220,000 Goal #8, $2,010,058 Goal #16, $230,000 (1) In connection with the business acquisition that was completed during the three months ended June 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 six months ended June 30, 2020 (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 1,249 $ 45.47 Granted 189 74.44 Released (303) 36.90 Forfeited (68) 46.85 Units outstanding, end of period 1,067 52.93 $ 104,743 |
Summary of Performance Stock Unit Activity | The following table summarizes Performance Stock Units (“PSUs”) activity, inclusive of XSUs, for the six months ended June 30, 2020 (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 6,033 $ 34.47 Granted 229 49.90 Released (158) 24.88 Forfeited (303) 36.10 Units outstanding, end of period 5,801 35.26 $ 569,207 |
Summary of the Stock Option Activity | The following table summarizes stock option activity for the six months ended June 30, 2020 (number of units 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 6,431 $ 28.34 Granted — — Exercised (65) 4.52 Expired / terminated — — Options outstanding, end of period 6,366 28.58 7.66 $ 442,748 Options exercisable, end of period 1 4.70 0.51 3 |
Stock-Based Compensation | The following table summarizes the composition of stock-based compensation expense for the three and six months ended June 30, 2020 and 2019 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Cost of products sold and services delivered $ 836 $ 237 $ 1,426 $ 463 Sales, general and administrative expenses 26,766 4,941 41,736 9,622 Research and development expenses 6,233 3,449 10,868 6,447 Total stock-based compensation expense $ 33,835 $ 8,627 $ 54,030 $ 16,532 |
Segment Data (Tables)
Segment Data (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
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 June 30, 2020 Three Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 69,877 $ 28,878 $ 98,755 $ 60,423 $ 19,968 $ 80,391 Net sales from services 613 41,891 42,504 149 31,822 31,971 Net sales 70,490 70,769 141,259 60,572 51,790 112,362 Cost of product sales 27,242 16,583 43,825 24,262 13,958 38,220 Cost of service sales — 9,257 9,257 — 8,582 8,582 Cost of sales 27,242 25,840 53,082 24,262 22,540 46,802 Gross margin $ 43,248 $ 44,929 $ 88,177 $ 36,310 $ 29,250 $ 65,560 Research and development $ 3,762 $ 25,798 $ 29,560 $ 3,087 $ 20,406 $ 23,493 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 145,052 60,991 $ 206,043 $ 125,724 $ 42,756 $ 168,480 Net sales from services 1,333 81,045 82,378 239 59,453 59,692 Net sales 146,385 142,036 288,421 125,963 102,209 228,172 Cost of product sales 57,490 35,219 92,709 47,540 30,280 77,820 Cost of service sales — 18,927 18,927 — 15,875 15,875 Cost of sales 57,490 54,146 111,636 47,540 46,155 93,695 Gross margin $ 88,895 $ 87,890 $ 176,785 $ 78,423 $ 56,054 $ 134,477 Research and development $ 6,794 $ 49,147 $ 55,941 $ 6,799 $ 40,048 $ 46,847 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2020USD ($)customercountry | Jun. 30, 2019countrycustomer | Jun. 30, 2020USD ($)countrycustomersegment | Jun. 30, 2019countrycustomer | Dec. 31, 2019USD ($)customer | Mar. 31, 2020USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of reportable segments | segment | 2 | |||||
Warranty period | 1 year | |||||
Corporate owned life insurance policies fair value | $ 4,016 | $ 4,016 | $ 4,214 | |||
Restricted cash balance | 56 | 56 | 56 | |||
Investment in unconsolidated affiliate | 4,700 | 4,700 | $ 4,700 | |||
Warrants for unconsolidated affiliate | 2,588 | 2,588 | $ 2,600 | |||
Prepaid Expenses and Other Current Assets | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Restricted cash balance | $ 100 | $ 100 | $ 100 | |||
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 | 0 | 0 | 0 | ||
Net Sales | Customer Concentration Risk | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Number of major customers | customer | 0 | 0 | 0 | 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 Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator for basic and diluted earnings per share: | ||||||
Net income (loss) | $ (30,759) | $ 4,074 | $ 738 | $ 6,419 | $ (26,685) | $ 7,157 |
Denominator: | ||||||
Weighted average shares outstanding (in shares) | 60,346 | 59,187 | 59,977 | 59,051 | ||
Dilutive effect of stock-based awards (in shares) | 813 | 825 | ||||
Diluted weighted average shares outstanding (in shares) | 60,346 | 60,000 | 59,977 | 59,876 | ||
Anti-dilutive stock-based awards excluded (in shares) | 12,773 | 12,056 | 12,866 | 12,111 | ||
Net income (loss) per common share: | ||||||
Basic (in dollars per share) | $ (0.51) | $ 0.01 | $ (0.44) | $ 0.12 | ||
Diluted (in dollars per share) | $ (0.51) | $ 0.01 | $ (0.44) | $ 0.12 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Summary of Changes in Estimated Product Warranty Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance, beginning of period | $ 1,476 | $ 898 |
Utilization of reserve | (350) | (250) |
Warranty expense (benefit) | (114) | 634 |
Balance, end of period | $ 1,012 | $ 1,282 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Adjustments to Opening Balance Sheet (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cumulative effect adjustment to retained earnings | $ (869,813) | $ (559,590) | $ (543,495) | $ (488,927) | $ (480,539) | $ (467,324) | |
Impact of Adoption of Topic 326 on opening balance sheet | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cumulative effect adjustment, income taxes | $ 200 | ||||||
Cumulative Effect, Period of Adoption, Adjustment | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cumulative effect adjustment to retained earnings | $ 640 | ||||||
Cumulative Effect, Period of Adoption, Adjustment | Impact of Adoption of Topic 326 on opening balance sheet | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cumulative effect adjustment to retained earnings | $ 600 |
Revenues - Revenues By Products
Revenues - Revenues By Products And Service Offerings (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | $ 141,259 | $ 112,362 | $ 288,421 | $ 228,172 |
TASER 7 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 11,588 | 9,298 | 26,914 | 19,252 |
TASER X26P | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 9,511 | 10,382 | 20,572 | 26,254 |
TASER X2 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 16,832 | 14,087 | 30,907 | 27,172 |
TASER Pulse | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 2,193 | 1,118 | 3,393 | 1,788 |
Cartridges | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 23,772 | 19,293 | 50,397 | 38,453 |
Axon Body | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 11,844 | 5,612 | 24,667 | 12,057 |
Axon Flex | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 680 | 1,623 | 1,863 | 2,847 |
Axon Fleet | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 4,098 | 3,120 | 8,873 | 6,636 |
Axon Dock | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 4,055 | 2,731 | 9,006 | 6,043 |
Axon Evidence and cloud services | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 42,477 | 31,930 | 82,129 | 59,584 |
TASER Cam | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 512 | 1,044 | 1,439 | 1,947 |
Extended warranties | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 10,833 | 8,902 | 21,268 | 18,148 |
Other | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 2,864 | 3,222 | 6,993 | 7,991 |
TASER | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 70,490 | 60,572 | 146,385 | 125,963 |
TASER | TASER 7 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 11,588 | 9,298 | 26,914 | 19,252 |
TASER | TASER X26P | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 9,511 | 10,382 | 20,572 | 26,254 |
TASER | TASER X2 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 16,832 | 14,087 | 30,907 | 27,172 |
TASER | TASER Pulse | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 2,193 | 1,118 | 3,393 | 1,788 |
TASER | Cartridges | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 23,772 | 19,293 | 50,397 | 38,453 |
TASER | Axon Body | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
TASER | Axon Flex | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
TASER | Axon Fleet | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
TASER | Axon Dock | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
TASER | Axon Evidence and cloud services | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 586 | 109 | 1,084 | 145 |
TASER | TASER Cam | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
TASER | Extended warranties | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 5,098 | 4,482 | 10,075 | 8,798 |
TASER | Other | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 910 | 1,803 | 3,043 | 4,101 |
Software and Sensors | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 70,769 | 51,790 | 142,036 | 102,209 |
Software and Sensors | TASER 7 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
Software and Sensors | TASER X26P | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
Software and Sensors | TASER X2 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
Software and Sensors | TASER Pulse | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
Software and Sensors | Cartridges | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 0 | 0 | ||
Software and Sensors | Axon Body | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 11,844 | 5,612 | 24,667 | 12,057 |
Software and Sensors | Axon Flex | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 680 | 1,623 | 1,863 | 2,847 |
Software and Sensors | Axon Fleet | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 4,098 | 3,120 | 8,873 | 6,636 |
Software and Sensors | Axon Dock | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 4,055 | 2,731 | 9,006 | 6,043 |
Software and Sensors | Axon Evidence and cloud services | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 41,891 | 31,821 | 81,045 | 59,439 |
Software and Sensors | TASER Cam | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 512 | 1,044 | 1,439 | 1,947 |
Software and Sensors | Extended warranties | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | 5,735 | 4,420 | 11,193 | 9,350 |
Software and Sensors | Other | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenue from contract with customers | $ 1,954 | $ 1,419 | $ 3,950 | $ 3,890 |
Revenues - Revenues By Geograph
Revenues - Revenues By Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | $ 141,259 | $ 112,362 | $ 288,421 | $ 228,172 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 107,547 | 93,594 | 225,010 | 187,927 |
Other countries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | $ 33,712 | $ 18,768 | $ 63,411 | $ 40,245 |
Revenue from Contract with Customer | Geographic Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk, percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Revenue from Contract with Customer | Geographic Concentration Risk | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk, percentage | 76.00% | 83.00% | 78.00% | 82.00% |
Revenue from Contract with Customer | Geographic Concentration Risk | Other countries | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk, percentage | 24.00% | 17.00% | 22.00% | 18.00% |
Revenues - Contract Assets, Con
Revenues - Contract Assets, Contract Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Contract assets, net | $ 62,907 | |
Contract liabilities (deferred revenue) | 212,668 | $ 205,800 |
Revenue recognized in the period from: | ||
Amounts included in contract liabilities at the beginning of the period | $ 86,655 |
Revenues - Schedule Of Contract
Revenues - Schedule Of Contract Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Disaggregation of Revenue [Line Items] | ||
Current | $ 129,518 | $ 117,864 |
Long-Term | 83,150 | 87,936 |
Total | 212,668 | 205,800 |
TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 26,316 | 22,578 |
Long-Term | 28,669 | 32,611 |
Total | 54,985 | 55,189 |
Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 103,202 | 95,286 |
Long-Term | 54,481 | 55,325 |
Total | 157,683 | 150,611 |
Warranty | ||
Disaggregation of Revenue [Line Items] | ||
Current | 25,022 | 22,568 |
Long-Term | 18,659 | 21,534 |
Total | 43,681 | 44,102 |
Warranty | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 13,162 | 12,716 |
Long-Term | 14,638 | 16,378 |
Total | 27,800 | 29,094 |
Warranty | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 11,860 | 9,852 |
Long-Term | 4,021 | 5,156 |
Total | 15,881 | 15,008 |
Hardware | ||
Disaggregation of Revenue [Line Items] | ||
Current | 33,168 | 31,804 |
Long-Term | 50,695 | 49,227 |
Total | 83,863 | 81,031 |
Hardware | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 12,626 | 9,569 |
Long-Term | 13,110 | 15,468 |
Total | 25,736 | 25,037 |
Hardware | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 20,542 | 22,235 |
Long-Term | 37,585 | 33,759 |
Total | 58,127 | 55,994 |
Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 71,328 | 63,492 |
Long-Term | 13,796 | 17,175 |
Total | 85,124 | 80,667 |
Software and Sensors | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 528 | 293 |
Long-Term | 921 | 765 |
Total | 1,449 | 1,058 |
Software and Sensors | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 70,800 | 63,199 |
Long-Term | 12,875 | 16,410 |
Total | $ 83,675 | $ 79,609 |
Revenues - Revenue Performance
Revenues - Revenue Performance Obligations (Details) $ in Millions | Jun. 30, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 1,340 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation to be recognized in the next twelve months, percent | 20.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 5 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation to be recognized in the next twelve months, percent | 25.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-07-01 | Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 7 years |
Cash, Cash Equivalents, and Inv
Cash, Cash Equivalents, and Investments (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Jun. 30, 2019 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | $ 686,953 | $ 396,283 | ||
Gross Unrealized Gains | 713 | 107 | ||
Gross Unrealized Losses | (133) | (34) | ||
Fair Value | 687,533 | 396,356 | ||
Cash and Cash Equivalents | 319,264 | 172,250 | ||
Short-term investments | 238,078 | 178,534 | ||
Long-term Investments | 129,611 | 45,499 | ||
Investment payable | 10,400 | $ 0 | ||
Credit loss reserve for held-to-maturity investments | 100 | $ 100 | ||
Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 203,831 | 41,714 | ||
Gross Unrealized Gains | 98 | 14 | ||
Gross Unrealized Losses | (6) | (4) | ||
Fair Value | 203,923 | 41,724 | ||
Cash and Cash Equivalents | 100,772 | 8,845 | ||
Short-term investments | 39,018 | 15,131 | ||
Long-term Investments | 64,041 | 17,738 | ||
Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 341,931 | 251,250 | ||
Gross Unrealized Gains | 615 | 93 | ||
Gross Unrealized Losses | (127) | (30) | ||
Fair Value | 342,419 | 251,313 | ||
Cash and Cash Equivalents | 77,301 | 60,086 | ||
Short-term investments | 199,060 | 163,403 | ||
Long-term Investments | 65,570 | 27,761 | ||
Cash | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 141,191 | 103,319 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 141,191 | 103,319 | ||
Cash and Cash Equivalents | 141,191 | 103,319 | ||
Short-term investments | 0 | 0 | ||
Money market funds | Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 92,773 | 8,845 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 92,773 | 8,845 | ||
Cash and Cash Equivalents | 92,773 | 8,845 | ||
Short-term investments | 0 | 0 | ||
Agency bonds | Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 78,965 | 32,869 | ||
Gross Unrealized Gains | 97 | 14 | ||
Gross Unrealized Losses | (6) | (4) | ||
Fair Value | 79,056 | 32,879 | ||
Cash and Cash Equivalents | 0 | 0 | ||
Short-term investments | 14,924 | 15,131 | ||
Long-term Investments | 64,041 | 17,738 | ||
Treasury bills | Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 32,093 | |||
Gross Unrealized Gains | 1 | |||
Gross Unrealized Losses | 0 | |||
Fair Value | 32,094 | |||
Cash and Cash Equivalents | 7,999 | |||
Short-term investments | 24,094 | |||
State and municipal obligations | Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 55,436 | 25,038 | ||
Gross Unrealized Gains | 71 | 8 | ||
Gross Unrealized Losses | (14) | 0 | ||
Fair Value | 55,493 | 25,046 | ||
Cash and Cash Equivalents | 6,502 | 0 | ||
Short-term investments | 40,892 | 21,560 | ||
Long-term Investments | 8,042 | 3,478 | ||
Certificates of Deposit | Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 1,900 | 1,400 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 1,900 | 1,400 | ||
Cash and Cash Equivalents | 0 | 0 | ||
Short-term investments | 1,400 | 1,400 | ||
Long-term Investments | 500 | |||
Corporate bonds | Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 196,247 | 135,175 | ||
Gross Unrealized Gains | 515 | 71 | ||
Gross Unrealized Losses | (113) | (30) | ||
Fair Value | 196,649 | 135,216 | ||
Cash and Cash Equivalents | 9,102 | 886 | ||
Short-term investments | 130,117 | 113,241 | ||
Long-term Investments | 57,028 | 21,048 | ||
U.S. Treasury repurchase agreements | Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 55,500 | 57,200 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 55,500 | 57,200 | ||
Cash and Cash Equivalents | 55,500 | 57,200 | ||
Short-term investments | 0 | 0 | ||
Treasury inflation - protected securities | Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 3,232 | 3,235 | ||
Gross Unrealized Gains | 29 | 14 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 3,261 | 3,249 | ||
Cash and Cash Equivalents | 0 | 0 | ||
Short-term investments | 3,232 | 0 | ||
Long-term Investments | 3,235 | |||
Commercial Paper | Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 29,616 | 29,202 | ||
Gross Unrealized Losses | 0 | 0 | ||
Fair Value | 29,616 | 29,202 | ||
Cash and Cash Equivalents | 6,197 | 2,000 | ||
Short-term investments | $ 23,419 | $ 27,202 |
Expected Credit Losses (Details
Expected Credit Losses (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | $ 1,567 |
Adoption of Topic 326, cumulative-effect adjustment to retained earnings | 768 |
Provision for expected credit losses | 550 |
Amounts written off charged against the allowance | (58) |
Other, including dispositions and foreign currency translation | (12) |
Balance, end of period | 2,815 |
United States | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | 1,395 |
Adoption of Topic 326, cumulative-effect adjustment to retained earnings | 767 |
Provision for expected credit losses | 472 |
Amounts written off charged against the allowance | (56) |
Balance, end of period | 2,578 |
Other countries | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | 172 |
Adoption of Topic 326, cumulative-effect adjustment to retained earnings | 1 |
Provision for expected credit losses | 78 |
Amounts written off charged against the allowance | (2) |
Other, including dispositions and foreign currency translation | (12) |
Balance, end of period | 237 |
COVID-19 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Provision for expected credit losses | $ 800 |
Expected Credit Losses - Type O
Expected Credit Losses - Type Of Customer Receivable (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Expected Credit Losses | ||
Accounts receivable and notes receivable, current | $ 1,672 | $ 1,567 |
Contract assets, net | 608 | |
Long-term notes receivable, net of current portion | 535 | |
Total allowance for expected credit losses on customer receivables | $ 2,815 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Inventory, finished goods, trial and evaluation hardware | $ 1,600 | $ 1,400 |
Raw materials | 35,695 | 20,789 |
Finished goods | 45,315 | 18,056 |
Total inventory | $ 81,010 | $ 38,845 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance, beginning of period | $ 25,013 |
Foreign currency translation adjustments | (108) |
Balance, end of period | 24,905 |
TASER | |
Goodwill [Roll Forward] | |
Balance, beginning of period | 1,354 |
Foreign currency translation adjustments | (54) |
Balance, end of period | 1,300 |
Software and Sensors | |
Goodwill [Roll Forward] | |
Balance, beginning of period | 23,659 |
Foreign currency translation adjustments | (54) |
Balance, end of period | $ 23,605 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Definite-Lived Intangible Assets Other than Goodwill (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | $ 24,213 | $ 24,438 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (14,824) | (13,409) |
Total | 9,389 | 11,029 |
Non-amortizable (indefinite-lived) intangible assets, Carrying Amount | 1,757 | 1,742 |
Intangible assets, Gross Carrying Amount | 25,970 | 26,180 |
Intangible assets, Net Carrying Amount | 11,146 | 12,771 |
TASER trademark | ||
Intangible Assets [Line Items] | ||
Non-amortizable (indefinite-lived) intangible assets, Carrying Amount | 900 | 900 |
Patents and trademarks pending | ||
Intangible Assets [Line Items] | ||
Non-amortizable (indefinite-lived) intangible assets, Carrying Amount | 857 | 842 |
Domain names | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | 3,161 | 3,161 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (1,187) | (1,035) |
Total | $ 1,974 | 2,126 |
Domain names | Minimum | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Useful Life | 5 years | |
Issued patents | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | $ 3,142 | 3,271 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (1,453) | (1,339) |
Total | $ 1,689 | 1,932 |
Issued patents | Minimum | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Useful Life | 5 years | |
Issued trademarks | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | $ 1,164 | 1,166 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (551) | (678) |
Total | $ 613 | 488 |
Issued trademarks | Minimum | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Useful Life | 3 years | |
Customer relationships | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | $ 3,672 | 3,721 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (1,635) | (1,416) |
Total | $ 2,037 | 2,305 |
Customer relationships | Minimum | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Useful Life | 4 years | |
Non-compete agreements | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | $ 448 | 450 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (411) | (404) |
Total | $ 37 | 46 |
Non-compete agreements | Minimum | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Useful Life | 3 years | |
Developed technology | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | $ 10,660 | 10,660 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (7,621) | (6,528) |
Total | $ 3,039 | 4,132 |
Developed technology | Minimum | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Useful Life | 3 years | |
Re-acquired distribution rights | ||
Intangible Assets [Line Items] | ||
Amortizable (definite-lived) intangible assets, Useful Life | 2 years | |
Amortizable (definite-lived) intangible assets, Gross Carrying Amount | $ 1,966 | 2,009 |
Amortizable (definite-lived) intangible assets, Accumulated Amortization | (1,966) | $ (2,009) |
Total | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of intangible assets | $ 0.8 | $ 0.9 | $ 1.7 | $ 1.9 |
Goodwill and Intangible asset_5
Goodwill and Intangible assets - Estimated Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 remaining | $ 1,655 | |
2021 | 2,864 | |
2022 | 1,264 | |
2023 | 971 | |
2024 | 891 | |
2025 | 623 | |
Thereafter | 1,121 | |
Total | $ 9,389 | $ 11,029 |
Other Long-Term Assets (Details
Other Long-Term Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Schedule of Investments [Line Items] | |||
Cash surrender value of corporate-owned life insurance policies | $ 4,016 | $ 4,214 | |
Deferred commissions | 23,450 | 22,068 | |
Restricted cash | 56 | 56 | |
Operating lease assets | 23,661 | 9,653 | |
Investment in unconsolidated affiliate | 4,700 | $ 4,700 | |
Warrants for unconsolidated affiliate | 2,588 | $ 2,600 | |
Prepaid expenses, deposits and other | 5,335 | 4,190 | |
Total other long-term assets | $ 63,806 | $ 40,181 | |
Flock Group Inc. | |||
Schedule of Investments [Line Items] | |||
Equity method investment, ownership percentage | 5.00% |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jun. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||||
Accrued salaries, benefits and bonus | $ 18,601 | $ 24,737 | ||
Accrued professional, consulting and lobbying fees | 4,384 | 3,235 | ||
Accrued warranty expense | 1,012 | 1,476 | $ 1,282 | $ 898 |
Accrued income and other taxes | 17,296 | 3,362 | ||
Other accrued expenses | 23,174 | 12,191 | ||
Accrued liabilities | $ 64,467 | $ 45,001 |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Tax Credit Carryforward [Line Items] | |
Deferred tax assets, net | $ 33.7 |
Unrecognized tax benefits | 6.9 |
Research and development tax credit studies | $ 2.7 |
Overall effective tax rate, after discrete period adjustments (as a percentage) | (123.80%) |
Effective tax rate, before discrete period adjustment (as a percentage) | (173.80%) |
Restricted Stock Units (RSUs) | |
Tax Credit Carryforward [Line Items] | |
Discrete tax benefit, stock-based compensation | $ 5.9 |
State Tax | |
Tax Credit Carryforward [Line Items] | |
Unrecognized tax benefits recognized during period | $ 6.9 |
Stockholders' Equity - Follow-o
Stockholders' Equity - Follow-on Offering (Details) - Common Stock $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | Jun. 30, 2020$ / sharesshares | |
Class of Stock [Line Items] | ||
Common stock sold (in shares) | shares | 3,450,000 | 3,450,000 |
Offering price | $ / shares | $ 92 | $ 92 |
Gross proceeds from public offering | $ | $ 317.4 | |
Net proceeds from public offering | $ | $ 306.8 | |
Underwriters' option to purchase additional shares | ||
Class of Stock [Line Items] | ||
Common stock sold (in shares) | shares | 450,000 |
Stockholders' Equity - CEO Perf
Stockholders' Equity - CEO Performance Award - Additional Information (Details) $ in Thousands | May 24, 2018USD ($)trancheitemshares | Jun. 30, 2020USD ($)shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
First tranche | $ 2,500,000 | |
Tranche incremental increase | $ 1,000,000 | |
Revenue goal number 1 | $ 710,058 | |
Revenue goal number 2 | 860,058 | |
Revenue goal number 3 | 1,010,058 | |
Revenue goal number 4 | 1,210,058 | |
Revenue goal number 5 | 1,410,058 | |
Revenue goal number 6 | 1,610,058 | |
Revenue goal number 7 | 1,810,058 | |
Revenue goal number 8 | 2,010,058 | |
Adjusted EBITDA goal number 9 | 125,000 | |
Adjusted EBITDA goal number 10 | 155,000 | |
Adjusted EBITDA goal number 11 | 175,000 | |
Adjusted EBITDA goal number 12 | 190,000 | |
Adjusted EBITDA goal number 13 | 200,000 | |
Adjusted EBITDA goal number 14 | 210,000 | |
Adjusted EBITDA goal number 15 | 220,000 | |
Adjusted EBITDA goal number 16 | 230,000 | |
Recorded share-based compensation expense | $ 60,500 | |
Number of options expected to vest | shares | 5,800,000 | |
Chief Executive Officer | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of vesting tranches | tranche | 12 | |
Vesting period | 10 years | |
Number of performance goals, revenue | item | 8 | |
Number of performance goals, adjusted EBITDA | item | 8 | |
Performance Shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance shares authorized (in shares) | shares | 6,365,856 | |
Unrecognized share-based compensation cost related to unvested stock option awards, probable of achievement | $ 167,900 | |
Weighted average period over which costs are recognized | 5 years 3 months 21 days | |
Unrecognized share-based compensation cost related to unvested stock option awards, not probable of achievement | $ 17,600 |
Stockholders' Equity - eXponent
Stockholders' Equity - eXponential Stock Performance Plan (Details) $ in Millions | Feb. 12, 2019USD ($)trancheitem | May 24, 2018USD ($)shares | Jun. 30, 2020USD ($)shares | Jun. 30, 2020USD ($)shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
First tranche | $ 2,500 | |||
Tranche incremental increase | $ 1,000 | |||
Recorded share-based compensation expense | $ 60.5 | |||
Number of options expected to vest | shares | 5,800,000 | 5,800,000 | ||
Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance shares authorized (in shares) | shares | 6,365,856 | |||
Unrecognized share-based compensation cost related to unvested stock option awards, probable of achievement | $ 167.9 | $ 167.9 | ||
Weighted average period over which costs are recognized | 5 years 3 months 21 days | |||
Unrecognized share-based compensation cost related to unvested stock option awards, not probable of achievement | $ 17.6 | $ 17.6 | ||
2019 eXponential Stock Performance Plan | eXponential Stock Units (XSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock, expiration period | 9 years | |||
Performance shares authorized (in shares) | shares | 100,000 | 200,000 | ||
Number of vesting tranches | tranche | 12 | |||
First tranche | $ 2,500 | |||
Number of performance goals, revenue | item | 8 | |||
Number of performance goals, adjusted EBITDA | item | 8 | |||
Tranche incremental increase | $ 1,000 | |||
Anti-dilution provision, maximum shares growth rate per year | 3.00% | |||
Recorded share-based compensation expense | $ 33.8 | |||
Number of options expected to vest | shares | 5,000,000 | 5,000,000 | ||
2019 eXponential Stock Performance Plan | Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation cost related to unvested stock option awards, probable of achievement | $ 148.1 | $ 148.1 | ||
Weighted average period over which costs are recognized | 5 years 1 month 13 days | |||
Unrecognized share-based compensation cost related to unvested stock option awards, not probable of achievement | $ 11.4 | $ 11.4 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of RSU and PSU Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
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 | 1,249 |
Number of Units, Granted (in shares) | shares | 189 |
Number of Units, Released (in shares) | shares | (303) |
Number of Units, Forfeited (in shares) | shares | (68) |
Number of Units outstanding, end of period (in shares) | shares | 1,067 |
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 | $ 45.47 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 74.44 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | $ / shares | 36.90 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 46.85 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ / shares | $ 52.93 |
Aggregate intrinsic value at end of period | $ | $ 104,743 |
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 | 6,033 |
Number of Units, Granted (in shares) | shares | 229 |
Number of Units, Released (in shares) | shares | (158) |
Number of Units, Forfeited (in shares) | shares | (303) |
Number of Units outstanding, end of period (in shares) | shares | 5,801 |
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 | $ 34.47 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 49.90 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | $ / shares | 24.88 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 36.10 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ / shares | $ 35.26 |
Aggregate intrinsic value at end of period | $ | $ 569,207 |
Stockholders' Equity - RSU and
Stockholders' Equity - RSU and PSU - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Tax payments, for net share settlement of share based award | $ 5,767 | $ 2,132 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value price per share (in dollars per share) | $ 98.13 | ||
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) | $ 98.13 | ||
Unrecognized stock-based compensation expense related to non-vested stock options | $ 42,400 | ||
Weighted average period over which costs are recognized | 2 years 14 days | ||
Number of units, granted (in shares) | 189 | ||
Number of units outstanding (in shares) | 1,067 | 1,249 | |
Shares withheld, for net share settlement of share based award (in shares) | 100 | ||
Tax payments, for net share settlement of share based award | $ 4,600 | ||
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) | $ 98.13 | ||
Unrecognized stock-based compensation expense related to non-vested stock options | $ 152,600 | ||
Weighted average period over which costs are recognized | 5 years 10 days | ||
Number of units, granted (in shares) | 229 | ||
Performance criteria had been met (in shares) | 100 | ||
Number of units outstanding (in shares) | 5,801 | 6,033 | |
Maximum additional shares to be issued (in shares) | 200 | ||
Shares withheld, for net share settlement of share based award (in shares) | 16 | ||
Tax payments, for net share settlement of share based award | $ 1,200 | ||
Minimum | Performance Stock Units (PSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of targeted shares vested | 0.00% | ||
Maximum | Performance Stock Units (PSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Percentage of targeted shares vested | 200.00% |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of the Company's Stock Options Activity (Details) - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of options, Options outstanding, beginning of year (in shares) | 6,431 |
Number of options, Granted (in shares) | 0 |
Number of options, Exercised (in shares) | (65) |
Number of options, Expired / terminated (in shares) | 0 |
Number of options, Options outstanding, end of year (in shares) | 6,366 |
Number of options, Options exercisable, end of period (in shares) | 1 |
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) | $ 28.34 |
Weighted average exercise price, Granted (in dollars per share) | 0 |
Weighted average exercise price, Exercised (in dollars per share) | 4.52 |
Weighted average exercise price, Expired / terminated (in dollars per share) | 0 |
Weighted average exercise price, Options outstanding, end of period (in dollars per share) | 28.58 |
Weighted average exercise price, Options exercisable, end of period (in dollars per share) | $ 4.70 |
Weighted average remaining contractual life, Options outstanding, end of period | 7 years 7 months 28 days |
Weighted average remaining contractual life, Options exercisable, end of period | 6 months 3 days |
Aggregate intrinsic value, Options outstanding, end of period | $ 442,748 |
Aggregate intrinsic value, Options exercisable, end of period | $ 3 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Activity - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value price per share (in dollars per share) | $ 98.13 | ||
Total intrinsic value of options exercised | $ 5.1 | $ 1.1 | |
Number of options outstanding (in shares) | 6,366 | 6,431 | |
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options outstanding (in shares) | 6,400 | ||
Options related to tranches considered probable of achievement | 5,800 |
Stockholders' Equity - Reported
Stockholders' Equity - Reported Share-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 33,835 | $ 8,627 | $ 54,030 | $ 16,532 |
Cost of products sold and services delivered | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 836 | 237 | 1,426 | 463 |
Sales, general and administrative expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 26,766 | 4,941 | 41,736 | 9,622 |
Research and development expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 6,233 | $ 3,449 | $ 10,868 | $ 6,447 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Plan - Additional Information (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Feb. 28, 2019 | Feb. 29, 2016 | |
2019 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock reserved for issuance (in shares) | 6,000,000 | |||
Shares available for grant under the plan (in shares) | 2,000,000 | |||
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 |
Line of Credit (Details)
Line of Credit (Details) | 6 Months Ended | |
Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | |
Debt Instrument [Line Items] | ||
Maximum ratio of total liabilities to tangible net worth | 2.50 | |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Available borrowing under letter of credit | $ 43,900,000 | |
Line of credit facility, increase (decrease), net | 100,000,000 | |
Line of credit borrowings | 0 | $ 0 |
Letters of credit outstanding amount | $ 6,100,000 | |
Company's leverage ratio | 0.0001 | |
Unsecured Revolving Line of Credit | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total availability under line of credit agreement | $ 50,000,000 | |
Letter of Credit | Line of Credit | ||
Debt Instrument [Line Items] | ||
Available borrowing under letter of credit | $ 10,000,000 | |
Minimum | London Interbank Offered Rate (LIBOR) | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate | 1.00% | |
Maximum | London Interbank Offered Rate (LIBOR) | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate | 1.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Jun. 30, 2020USD ($)lawsuit |
Loss Contingencies [Line Items] | |
Number of lawsuits against Company | lawsuit | 8 |
Self insurance on product claim | $ 5 |
Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 24 |
Expiring in 2020 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 0.5 |
Expiring in 2021 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 2.3 |
Expiring in 2022 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 3.2 |
Expiring in 2023 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 7.5 |
Expiring in 2024 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 10.5 |
Line of Credit | |
Loss Contingencies [Line Items] | |
Letters of credit outstanding amount | 6.1 |
Outstanding letters of credit and bank guarantees not drawn against credit facility | $ 1.9 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Employee deferrals deemed vested percentage upon contribution | 100.00% | |||
Defined contribution plan, cost | $ 1.3 | $ 1.1 | $ 2.8 | $ 2.5 |
Maximum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Deferral percentage of base salary (up to) | 80.00% | |||
Deferral percentage of other compensation (up to) | 100.00% |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments of company | segment | 2 | |||
Net sales | $ 141,259 | $ 112,362 | $ 288,421 | $ 228,172 |
Cost of sales | 53,082 | 46,802 | 111,636 | 93,695 |
Gross margin | 88,177 | 65,560 | 176,785 | 134,477 |
Research and development | 29,560 | 23,493 | 55,941 | 46,847 |
TASER | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 70,490 | 60,572 | 146,385 | 125,963 |
Cost of sales | 27,242 | 24,262 | 57,490 | 47,540 |
Gross margin | 43,248 | 36,310 | 88,895 | 78,423 |
Research and development | 3,762 | 3,087 | 6,794 | 6,799 |
Software and Sensors | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 70,769 | 51,790 | 142,036 | 102,209 |
Cost of sales | 25,840 | 22,540 | 54,146 | 46,155 |
Gross margin | 44,929 | 29,250 | 87,890 | 56,054 |
Research and development | 25,798 | 20,406 | 49,147 | 40,048 |
Product | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 98,755 | 80,391 | 206,043 | 168,480 |
Cost of sales | 43,825 | 38,220 | 92,709 | 77,820 |
Product | TASER | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 69,877 | 60,423 | 145,052 | 125,724 |
Cost of sales | 27,242 | 24,262 | 57,490 | 47,540 |
Product | Software and Sensors | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 28,878 | 19,968 | 60,991 | 42,756 |
Cost of sales | 16,583 | 13,958 | 35,219 | 30,280 |
Service | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 42,504 | 31,971 | 82,378 | 59,692 |
Cost of sales | 9,257 | 8,582 | 18,927 | 15,875 |
Service | TASER | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 613 | 149 | 1,333 | 239 |
Cost of sales | 0 | 0 | ||
Service | Software and Sensors | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 41,891 | 31,822 | 81,045 | 59,453 |
Cost of sales | $ 9,257 | $ 8,582 | $ 18,927 | $ 15,875 |