Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 23, 2024 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 001-16391 | ||
Entity Registrant Name | Axon Enterprise, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 86-0741227 | ||
Entity Address, Address Line One | 17800 North 85th Street | ||
Entity Address, City or Town | Scottsdale | ||
Entity Address, State or Province | AZ | ||
Entity Address, Postal Zip Code | 85255 | ||
City Area Code | 480 | ||
Local Phone Number | 991-0797 | ||
Title of 12(b) Security | Common Stock, $0.00001 par value per share | ||
Trading Symbol | AXON | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 14.3 | ||
Entity Common Stock, Shares Outstanding | 75,302,832 | ||
Documents Incorporated by Reference | Parts of the registrant’s definitive proxy statement for its 2024 Annual Meeting of Shareholders to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, 2023 are incorporated by reference into Part III of this Form 10-K | ||
Entity Central Index Key | 0001069183 | ||
Auditor Name | GRANT THORNTON LLP | ||
Auditor Firm ID | 248 | ||
Auditor Location | Phoenix, Arizona | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 598,545 | $ 353,684 |
Marketable securities | 77,940 | 39,240 |
Short-term investments | 644,054 | 581,769 |
Accounts and notes receivable, net of allowance of $2,392 and $2,176 as of December 31, 2023 and December 31, 2022, respectively | 417,690 | 358,190 |
Contract assets, net | 275,779 | 196,902 |
Inventory | 269,855 | 202,471 |
Prepaid expenses and other current assets | 112,786 | 73,022 |
Total current assets | 2,396,649 | 1,805,278 |
Property and equipment, net | 200,533 | 169,843 |
Deferred tax assets, net | 229,513 | 156,866 |
Intangible assets, net | 19,539 | 12,158 |
Goodwill | 57,945 | 44,983 |
Long-term investments | 156,207 | |
Long-term notes receivable, net | 2,588 | 5,210 |
Long-term contract assets, net | 77,710 | 45,170 |
Strategic investments | 231,730 | 296,563 |
Other long-term assets | 220,638 | 159,616 |
Total assets | 3,436,845 | 2,851,894 |
Current liabilities: | ||
Accounts payable | 88,326 | 59,918 |
Accrued liabilities | 188,230 | 155,934 |
Current portion of deferred revenue | 491,691 | 360,037 |
Customer deposits | 21,935 | 20,399 |
Other current liabilities | 9,787 | 6,358 |
Total current liabilities | 799,969 | 602,646 |
Deferred revenue, net of current portion | 281,852 | 248,003 |
Liability for unrecognized tax benefits | 18,049 | 10,745 |
Long-term deferred compensation | 11,342 | 6,285 |
Deferred tax liability, net | 1 | |
Long-term lease liabilities | 33,550 | 37,143 |
Convertible notes, net | 677,113 | 673,967 |
Other long-term liabilities | 2,936 | 4,613 |
Total liabilities | 1,824,811 | 1,583,403 |
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 December 31, 2023 and December 31, 2022, respectively | ||
Common stock, $0.00001 par value; 200,000,000 shares authorized; 75,301,424 and 71,474,581 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | 1 | 1 |
Additional paid-in capital | 1,347,410 | 1,174,594 |
Treasury stock at cost, 20,220,227 shares as of December 31, 2023 and December 31, 2022 | (155,947) | (155,947) |
Retained earnings | 431,249 | 257,022 |
Accumulated other comprehensive loss | (10,679) | (7,179) |
Total stockholders' equity | 1,612,034 | 1,268,491 |
Total liabilities and stockholders' equity | $ 3,436,845 | $ 2,851,894 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance on accounts receivable | $ 2,392 | $ 2,176 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 75,301,424 | 71,474,581 |
Common stock, shares outstanding (in shares) | 75,301,424 | 71,474,581 |
Treasury stock, shares (in shares) | 20,220,227 | 20,220,227 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Net sales | $ 1,563,391 | $ 1,189,935 | $ 863,381 |
Cost of sales | 608,009 | 461,297 | 322,471 |
Gross margin | 955,382 | 728,638 | 540,910 |
Operating expenses: | |||
Sales, general and administrative | 496,874 | 401,575 | 515,007 |
Research and development | 303,719 | 233,810 | 194,026 |
Total operating expenses | 800,593 | 635,385 | 709,033 |
Income (loss) from operations | 154,789 | 93,253 | (168,123) |
Interest income, net | 42,112 | 4,294 | 1,483 |
Other income (loss), net | (41,901) | 98,971 | 25,265 |
Income (loss) before provision (benefit) for income taxes | 155,000 | 196,518 | (141,375) |
Provision (benefit) for income taxes | (19,227) | 49,379 | (81,357) |
Net income (loss) | $ 174,227 | $ 147,139 | $ (60,018) |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ 2.35 | $ 2.07 | $ (0.91) |
Diluted (in dollars per share) | $ 2.31 | $ 2.03 | $ (0.91) |
Weighted average shares outstanding: | |||
Basic (in shares) | 74,195 | 71,093 | 66,191 |
Diluted (in shares) | 75,456 | 72,534 | 66,191 |
Net income (loss) | $ 174,227 | $ 147,139 | $ (60,018) |
Foreign currency translation adjustments | (4,352) | (4,818) | (1,251) |
Unrealized gain (loss) on available-for-sale investments | 852 | (1,044) | (207) |
Comprehensive income (loss) | 170,727 | 141,277 | (61,476) |
Product | |||
Net sales | 967,711 | 801,388 | 608,525 |
Cost of sales | 450,718 | 363,219 | 260,098 |
Service | |||
Net sales | 595,680 | 388,547 | 254,856 |
Cost of sales | $ 157,291 | $ 98,078 | $ 62,373 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance at Dec. 31, 2020 | $ 1 | $ 962,159 | $ (155,947) | $ 169,901 | $ 141 | $ 976,255 |
Beginning balance (in shares) at Dec. 31, 2020 | 63,766,555 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | 105,514 | 105,514 | ||||
Issuance of common stock (in shares) | 577,956 | |||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes | (331,309) | (331,309) | ||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes (in shares) | 2,624,446 | |||||
Stock options exercised | 51,614 | 51,614 | ||||
Stock options exercised (in shares) | 3,927,899 | |||||
Stock-based compensation | 303,331 | 303,331 | ||||
Issuance of common stock for business combination contingent consideration | 3,920 | 3,920 | ||||
Net income (loss) | (60,018) | (60,018) | ||||
Other comprehensive loss, net | (1,458) | (1,458) | ||||
Ending balance at Dec. 31, 2021 | $ 1 | 1,095,229 | $ (155,947) | 109,883 | (1,317) | 1,047,849 |
Ending balance (in shares) at Dec. 31, 2021 | 70,896,856 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | (74) | (74) | ||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes | (4,870) | (4,870) | ||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes (in shares) | 566,780 | |||||
Stock-based compensation | 106,176 | 106,176 | ||||
Issuance of common stock for business combination contingent consideration (in shares) | 10,945 | |||||
Tax benefit related to convertible note hedge | 48,858 | 48,858 | ||||
Purchase of convertible note hedge | (194,994) | (194,994) | ||||
Issuance of warrants | 124,269 | 124,269 | ||||
Net income (loss) | 147,139 | 147,139 | ||||
Other comprehensive loss, net | (5,862) | (5,862) | ||||
Ending balance at Dec. 31, 2022 | $ 1 | 1,174,594 | $ (155,947) | 257,022 | (7,179) | 1,268,491 |
Ending balance (in shares) at Dec. 31, 2022 | 71,474,581 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | 94,705 | 94,705 | ||||
Issuance of common stock (in shares) | 467,594 | |||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes | (107,894) | (107,894) | ||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes (in shares) | 1,441,279 | |||||
Stock options exercised | 54,503 | 54,503 | ||||
Stock options exercised (in shares) | 1,907,026 | |||||
Stock-based compensation | 131,358 | 131,358 | ||||
Issuance of common stock for business combination contingent consideration | 144 | 144 | ||||
Issuance of common stock for business combination contingent consideration (in shares) | 10,944 | |||||
Net income (loss) | 174,227 | 174,227 | ||||
Other comprehensive loss, net | (3,500) | (3,500) | ||||
Ending balance at Dec. 31, 2023 | $ 1 | $ 1,347,410 | $ (155,947) | $ 431,249 | $ (10,679) | $ 1,612,034 |
Ending balance (in shares) at Dec. 31, 2023 | 75,301,424 | 20,220,227 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 174,227 | $ 147,139 | $ (60,018) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Stock-based compensation | 131,358 | 106,176 | 303,331 |
Deferred income taxes | (73,002) | 22,090 | (81,303) |
Realized and unrealized loss (gain) on strategic investments and marketable securities, net | 41,785 | (98,943) | (23,035) |
Depreciation and amortization | 32,638 | 24,381 | 18,694 |
Bond amortization | (16,449) | (1,463) | 5,217 |
Noncash lease expense | 6,846 | 6,725 | 5,573 |
Unrecognized tax benefits | 4,775 | 3,475 | (706) |
Amortization of issuance costs | 3,126 | 198 | |
Other noncash items | 2,322 | 6,530 | 24 |
Change in assets and liabilities: | |||
Accounts and notes receivable and contract assets | (172,524) | (73,228) | (205,769) |
Inventory | (71,896) | (95,987) | (18,272) |
Prepaid expenses and other assets | (102,370) | (52,207) | (40,158) |
Accounts payable, accrued and other liabilities | 64,384 | 80,757 | 45,301 |
Deferred revenue | 164,043 | 159,718 | 175,615 |
Net cash provided by operating activities | 189,263 | 235,361 | 124,494 |
Cash flows from investing activities: | |||
Purchases of investments | (545,988) | (764,374) | (362,479) |
Proceeds from call / maturity of investments | 657,418 | 72,138 | 718,617 |
Proceeds from sale of strategic investments | 14,546 | ||
Purchases of property, plant and equipment | (59,635) | (55,802) | (49,886) |
Proceeds from disposal of property and equipment | 98 | 287 | 43 |
Purchase of intangible assets | (635) | (307) | (392) |
Strategic investments | (17,692) | (80,805) | (45,500) |
Business acquisition, net of cash acquired | (21,090) | (2,104) | (22,393) |
Net cash provided by (used in) investing activities | 12,476 | (830,967) | 252,556 |
Cash flows from financing activities: | |||
Net proceeds from equity offering | 94,705 | (74) | 105,514 |
Proceeds from options exercised | 54,503 | 51,614 | |
Income and payroll tax payments for net-settled stock awards | (107,894) | (4,870) | (331,309) |
Net proceeds from issuance of convertible senior notes | 673,769 | ||
Proceeds from issuance of warrants | 124,269 | ||
Purchase of convertible note hedge | (194,994) | ||
Net cash provided by (used in) financing activities | 41,314 | 598,100 | (174,181) |
Effect of exchange rate changes on cash and cash equivalents | 2,065 | (3,380) | (1,982) |
Net increase (decrease) in cash and cash equivalents | 245,118 | (886) | 200,887 |
Cash and cash equivalents and restricted cash, beginning of period | 355,552 | 356,438 | 155,551 |
Cash and cash equivalents and restricted cash, end of period | $ 600,670 | $ 355,552 | $ 356,438 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Supplemental disclosures: | |||
Cash and cash equivalents | $ 598,545 | $ 353,684 | $ 356,332 |
Restricted cash (Note 1) | 2,125 | 1,868 | 106 |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | 600,670 | 355,552 | 356,438 |
Cash paid for interest | 3,508 | ||
Cash paid for income taxes, net of refunds | 64,492 | 10,508 | 5,108 |
Non-cash transactions | |||
Property and equipment purchases in accounts payable and accrued liabilities | $ 238 | $ 1,056 | 1,994 |
Non-cash purchase consideration related to business combinations | $ 3,920 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | Note 1 - Organization and Summary of Significant Accounting Policies Axon Enterprise, Inc. (“Axon,” the “Company,” “we” or “us”) is a market-leading provider of law enforcement technology solutions. Our mission is to protect life in service of promoting peace, justice and strong institutions. The accompanying 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 The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions in these consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit losses, ● valuation of goodwill, intangible and long-lived assets, ● valuation of strategic investments, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, and ● recognition and measurement of contingencies and accrued litigation expense. Actual results could differ materially from those estimates. Cash, Cash Equivalents and Investments Cash, cash equivalents and investments include cash, money market funds, commercial paper, corporate bonds, term deposits, U.S. Government bonds, agency bonds, U.S. Treasury bills and U.S. Treasury Inflation-Protected Securities. We place our cash and cash equivalents with high quality financial institutions. Although we deposit our cash with multiple financial institutions, our deposits regularly exceed federally insured limits. Cash and cash equivalents include funds on hand and highly liquid investments purchased with initial maturity of three months or less. Short-term investments include securities with an expected maturity date within one year of the balance sheet date that do not meet the definition of a cash equivalent, and long-term investments are securities with an expected maturity date greater than one year and less than two years in accordance with our investment policy. We report available-for-sale investments at fair value as of each balance sheet date and record any unrealized gains or losses as a component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in interest and other income, net within the consolidated statements of operations. When the fair value is below the amortized cost of a marketable security, an estimate of expected credit losses is made. The credit-related impairment amount is recognized in the consolidated statements of operations. Credit losses are recognized through the use of an allowance for expected credit losses account in the consolidated balance sheets and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. There were no credit losses recorded on our investment portfolio during the years ended December 31, 2023 and 2022. Restricted Cash Restricted cash balances of $2.1 million and $1.9 million as of December 31, 2023 and 2022, respectively, primarily relate to funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. As of December 31, 2023, a pproximately $2.0 million was included in prepaid expenses and other assets on our consolidated balance sheet, with the remainder in other long-term assets. Inventory Inventories are stated at lower of cost or realizable values. Cost of inventories are determined on the first-in, first-out basis utilizing a standard cost methodology. Additional provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. These provisions are based on management’s best estimate after considering historical demand, projected future demand, inventory purchase commitments, industry and market trends and conditions among other factors. We evaluate inventory costs for abnormal costs due to excess production capacity and treat such costs as period costs. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Additions and improvements are capitalized, while ordinary maintenance and repair expenditures are charged to expense as incurred. Depreciation is calculated using the straight-line method over the estimated economic life. Software Development Costs We expense software development costs, including costs to develop software products or the software component of products and services to be marketed to external users, before technological feasibility of such products is reached. Software development costs also include costs to develop software programs to be used solely to meet our internal needs and applications. We capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the intended function. Additionally, we capitalize qualifying costs incurred for upgrades and enhancements to existing software that result in additional functionality. Costs related to preliminary project planning activities, post-implementation activities, maintenance and minor modifications are expensed as incurred. Internal-use software development costs are amortized on a straight-line basis over the estimated useful life of the software. We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. Valuation of Goodwill, Intangible 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 events and circumstances could include 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 values computed using discounted cash flows. Finite-lived intangible assets and other long-lived assets are amortized over their estimated useful lives. 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 test goodwill and intangible assets for impairment on an annual basis on December 31, 2023 and on an interim basis when certain events and circumstances exist. During the year ended December 31, 2023, we recorded $0.3 million of impairment charges primarily related to construction in process. During the year ended December 31, 2022, we recorded $5.3 million of impairment charges. Of this total, $3.3 million related to the cease-use of a portion of our Seattle office. An additional $1.4 million related to the decision to slow pacing on construction of our new Scottsdale, Arizona campus. During the year ended December 31, 2021, we recorded an immaterial amount of impairment charges. Customer Deposits We require deposits in advance of shipment for certain customer sales orders. Additionally, customers may elect to make deposits with us related to contracts for our products and services that were not executed as of the end of a reporting period. Customer deposits are included in other current liabilities in the consolidated balance sheets. Revenue Recognition, Deferred Revenue and Accounts and Notes Receivable and Contract Assets We derive revenue from two primary sources: (1) the sale of physical products, including conducted energy devices (“CEDs”), Axon cameras, Axon Signal-enabled devices, corresponding hardware extended warranties, and related accessories such as Axon docks, cartridges and batteries, among others, and (2) subscriptions to our Axon Evidence digital evidence management software-as-a-service (“SaaS”) offering (including data storage fees and other ancillary services), which includes varying levels of support. To a lesser extent, we also recognize revenue from training, professional services and other software and SaaS services. We apply the five-step model outlined in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts from Customers (“Topic 606”). For additional discussion of the adoption of Topic 606, see Note 2. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in Topic 606. For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using our estimate of the standalone selling price (“SSP”) of each distinct good or service in the contract. Revenues are recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, each of which is generally distinct and accounted for as a separate performance obligation. Revenue is recognized net of allowances for returns. Performance obligations to deliver products, including CEDs, Axon cameras and related accessories, such as docks, cartridges and batteries, are generally satisfied at the point in time we ship the product, as this is when the customer obtains control of the asset under our standard terms and conditions. In certain contracts with non-standard terms and conditions, these performance obligations may not be satisfied until formal customer acceptance occurs. Performance obligations to fulfill service-type extended warranties and provide our SaaS offerings, including Axon Evidence and other cloud services, are generally satisfied over time as the customer receives and consumes the benefits of these services over the stated service period. Many of our products and services are sold on a standalone basis. We also bundle our hardware products and services together and sell them to our customers in single transactions where the customer can make payments over a multi-year period. These sales may include payments for upfront hardware and services, as well as payments for hardware and services to be provided by us at a future date. Additionally, we offer customers the ability to purchase CED cartridges and certain services on an unlimited basis over the contractual term. Due to the unlimited nature of these arrangements whereby we are obligated to deliver unlimited products at the customer’s request, we account for these arrangements as stand-ready obligations, and recognize revenue ratably over the contract period. Cost of product sales is recognized when control of hardware products or accessories has transferred to the customer. We have elected to recognize shipping costs as an expense in cost of product sales when the control of hardware products or accessories has transferred to the customer. Sales tax collected on sales is netted against government remittances and, thus, recorded on a net basis. The timing of revenue recognition may differ from the timing of invoicing to customers. We generally have an unconditional right to consideration when we invoice our customers and record a receivable. We record a contract asset when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. Contract asset amounts that will be invoiced during the subsequent 12-month period from the balance sheet date are classified as current assets and the remaining portion is recorded within other assets on our consolidated balance sheets. Deferred revenue that will be recognized during the subsequent 12-month period from the balance sheet date is recorded as current deferred revenue and the remaining portion is recorded as long-term deferred revenue. Generally, customers are billed in annual installments. See Note 2 for further disclosures about our contract assets. Sales are typically made on credit, and we generally do not require collateral. We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable, contract assets, notes receivable and off-balance-sheet exposures 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. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. Additionally, specific reserve 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. Accounts and notes receivable, contract assets and off-balance-sheet exposures are presented net of a reserve for expected credit losses, which totaled $4.0 million and $3.6 million as of December 31, 2023 and 2022, respectively. This reserve represents management’s best estimate and application of judgment considering a number of factors, including those listed above. In the event that actual uncollectible amounts differ from our estimates, additional expense could be necessary. Cost of Product and Service Sales Cost of product sales represents manufacturing costs, consisting of materials, labor and overhead related to finished goods and components. Shipping costs incurred related to product delivery are also included in cost of products sold. Cost of service sales includes third-party cloud services, and software maintenance and support costs, including personnel costs, associated with supporting Evidence.com and other software related services. Advertising Costs We expense advertising costs in the period in which they are incurred. We incurred advertising costs of $1.9 million, $2.3 million and $2.6 million in the years ended December 31, 2023, 2022 and 2021, respectively. Advertising costs are included in sales, general and administrative (“SG&A”) expenses in the consolidated statements of operations. Warranty Reserves We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. The company estimates and records a liability for standard warranty at the time products are sold. The estimates are based on historical experience and reflect management’s best estimates of costs to be incurred over the warranty period. Adjustments may be required when actual or projected costs differ. Variations in component failure rates, repair costs and the point of failure within the product life cycle are key drivers that impact our periodic re-assessment of the warranty liability. Revenue related to separately priced extended warranties is initially recorded as deferred revenue at its allocated amount and subsequently recognized as net sales on a straight-line basis over the warranty service period. Costs related to extended warranties are charged to cost of product and service sales when the costs become probable and can be reasonably estimated Changes in our estimated warranty reserve were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Balance, beginning of period $ 811 $ 2,822 $ 769 Utilization of reserve (1,499) (2,209) (873) Warranty expense 8,062 198 2,926 Balance, end of period $ 7,374 $ 811 $ 2,822 Research and Development Expenses We expense as incurred research and development (“R&D”) costs that do not meet the qualifications to be capitalized. We incurred R&D expense of $303.7 million, $233.8 million and $194.0 million in 2023, 2022 and 2021, respectively. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced through the establishment of a valuation allowance if, based upon available evidence, it is determined that it is more likely than not that the deferred tax assets will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We also assess whether uncertain tax positions, as filed, could result in the recognition of a liability for possible interest and penalties. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. Refer to Note 13 for additional information regarding the change in unrecognized tax benefits. Concentration of Credit Risk and Major Customers / Suppliers Financial instruments that potentially subject us to concentrations of credit risk consist of accounts and notes receivable, contract assets and cash. Historically, we have experienced an immaterial level of write-offs related to uncollectible accounts. We maintain the majority of our cash at two depository institutions. As of December 31, 2023, the aggregate balances in such accounts were $560.4 million. Our balances with these two institutions regularly exceed Federal Deposit Insurance Corporation insured limits for domestic deposits and various deposit insurance programs covering our deposits in Australia, the United Kingdom No customer represented more than 10% of total net sales for the years ended December 31, 2023, 2022 or 2021. At December 31, 2023 and 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off-the-shelf and custom components, including 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 United States, China, Mexico, Republic of Korea, Taiwan and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own substantially all of the injection molded component tooling, designs and test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have experienced supply chain disruptions relating to materials and port constraints, we have remained focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers. 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 December 31, 2023 were composed of money market funds, commercial paper, corporate bonds, term deposits, U.S. Government bonds, agency bonds, U.S. Treasury bills and U.S. Treasury Inflation-Protected Securities. Cash equivalents and investments at December 31, 2022 were composed of . We have investments in marketable securities, for which changes in fair value are recorded in interest and other income, net in the consolidated statement of operations. We have strategic investments in various unconsolidated affiliates as of December 31, 2023. The estimated fair values of the investments was determined based on Level 3 inputs. We have outstanding our 0.50% convertible senior notes due 2027 (the “Notes” or “2027 Notes”), for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at December 31, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the consolidated balance sheets. Segment and Geographic Information Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the ‘Software and Sensors” segment); and the manufacture and sale of CEDs, batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as “Axon Cloud revenue.” Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker (“CODM”). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 19. For a summary of net sales by geographic area, see Note 2. The majority of our sales to international customers are transacted in foreign currencies and are attributed to each country based on the shipping address of the distributor or customer. For the years ended December 31, 2023, 2022 and 2021, no individual country outside the United States represented more than 10% of net sales. Substantially all of our assets are located in the United States. Stock-Based Compensation We recognize expense related to stock-based compensation transactions in which we receive services in exchange for equity instruments of the Company. Stock-based compensation expense for restricted stock units (“RSUs”) is measured based on the closing fair market value of our common stock on the date of grant. When determining the grant date fair value of stock-based awards, we consider whether an adjustment is required to the observable market price or volatility of our common stock used in the valuation as a result of material non-public information. We recognize stock-based compensation expense over the award’s requisite service period on a straight-line basis for time-based RSUs. For performance-based RSUs, stock-based 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 performance-based options with a vesting schedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized 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. For both time-based and performance-based RSUs, we recognize forfeitures as they occur as a reduction to stock-based compensation expense and to additional paid-in-capital. eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the Axon Enterprise, Inc. 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 (“2019 XSPP”) and grants of eXponential Stock Units (“2019 XSUs”) under the plan. The XSUs are grants of performance-based RSUs, each with a term of approximately nine years quarters. As of December 31, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. We recorded stock-based compensation expense of $199.9 million related to the 2019 XSU awards from their respective grant dates through December 31, 2023. As of December 31, 2023, no unrecognized stock-based compensation expense remained under the 2019 XSPP. Stock-based compensation expense associated with 2019 XSU awards is recognized over the longest explicit, implicit or derived service period for each pair of market capitalization and operational goals, beginning at the point in time when the relevant operational goal is considered probable of being met. The market capitalization goal period and the valuation of each tranche are determined using a Monte Carlo simulation, which is also used as the basis for determining the expected achievement period of the market capitalization goal. The probability of meeting an operational goal and the expected achievement point in time for meeting a probable operational goal are based on a subjective assessment of our forward-looking financial projections, taking into consideration statistical analysis. Even though no tranches of the 2019 XSU awards vest unless a market capitalization and a matching operational goal are both achieved, stock-based compensation expense is recognized when an operational goal is considered probable of achievement regardless of whether a market capitalization goal is actually achieved. Given the complexity of the awards, we utilized Monte Carlo simulations to simulate a range of possible future market capitalizations for the Company over the term of the awards at each of the respective grant dates. The average of all iterations of the simulation was used as the basis for the valuation and market capitalization goal derived service period for each tranche. Additionally, we applied an illiquidity discount of between 10.3% and 17.6% to the valuation of 2019 XSUs because the awards specify a post-vest holding period of 2.5 years for the acquired shares that vest. Certain of the 2019 XSU awards specify a post-vest holding period of the longer of 2.5 years or until the next tranche vests. The illiquidity discounts were estimated using the Finnerty model and reduced by the impact of expected payroll and income taxes due upon vesting of the awards, as the related proportion of shares are expected to be sold to satisfy such obligations. We measured the grant date fair value of the 2019 XSU awards with the following assumptions: risk-free interest rate of between 0.5% and 4.1%, expected term of between 5.2 and 8.0 years, expected volatility of between 46.4% and 55.8%, and dividend yield of 0.00%. Stock Options On May 24, 2018, our shareholders approved the Board of Directors’ grant of 6,365,856 performance-based stock options to Patrick W. Smith, our Chief Executive Officer (the “2018 CEO Performance Award”). The 2018 CEO Performance Award consists of 12 substantially equal 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 Chief Executive Officer or as both Executive Chairman and Chief Product Officer and service through each vesting date. Stock-based compensation expense associated with the 2018 CEO Performance Award is recognized over the requisite service period, which is defined as the longer of the expected achievement period for each pair of market capitalization and operational goals, beginning at the point in time when the relevant operational goal is considered probable of being met. As of December 31, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. As a result, 6.4 million stock options have |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2023 | |
Revenues. | |
Revenues | Note 2 - Revenues Nature of Products and Services The following table presents our revenues by primary product and service offering (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 333,923 — 333,923 $ 282,698 $ — $ 282,698 Cartridges 193,285 — 193,285 181,686 — 181,686 Axon Evidence and Cloud Services 34,775 566,183 600,958 18,752 371,889 390,641 Extended Warranties 31,689 62,577 94,266 29,008 49,765 78,773 Axon Body Cameras and Accessories — 183,023 183,023 — 157,281 157,281 Axon Fleet Systems — 118,129 118,129 — 63,017 63,017 Other (1) (2) 18,933 20,874 39,807 19,422 16,417 35,839 Total $ 612,605 $ 950,786 $ 1,563,391 $ 531,566 $ 658,369 $ 1,189,935 Year Ended December 31, 2021 Software and TASER Sensors Total TASER Devices (Professional) $ 234,616 $ — $ 234,616 Cartridges 152,842 — 152,842 Axon Evidence and Cloud Services 9,159 246,005 255,164 Extended Warranties 24,125 33,686 57,811 Axon Body Cameras and Accessories — 104,080 104,080 Axon Fleet Systems — 24,319 24,319 Other (1) (2) 16,185 18,364 34,549 Total $ 436,927 $ 426,454 $ 863,381 (1) (2) The following table presents our revenues disaggregated by geography (in thousands): Year Ended December 31, 2023 2022 2021 United States $ 1,338,208 86 % $ 987,975 83 % $ 686,914 80 % Other Countries 225,183 14 201,960 17 176,467 20 Total $ 1,563,391 100 % $ 1,189,935 100 % $ 863,381 100 % Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers. We generally have an unconditional right to consideration when we invoice our customers and record a receivable. We record a contract asset when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. Contract assets generally result from our subscription programs where we satisfy a hardware performance obligation upon shipment to the customer, and the right to the portion of the transaction price allocated to that hardware performance obligation is conditional on our future performance of a SaaS service obligation under the contract. We recognize a portion of the amount allocated to hardware products shipped to the customer as accounts receivable when invoiced to the customer, and record the remaining allocated value as a contract asset as we have generally fulfilled our hardware performance obligation upon shipment. Unbilled accounts receivable expected to be invoiced and collected within 12 months were $4.8 million as of December 31, 2023, and were included in accounts and notes receivable, net on our consolidated balance sheet. Contract liabilities generally consist of deferred revenue on our subscription programs where we generally invoice customers at the beginning of each annual contract period and record a receivable at the time of invoicing when there is an unconditional right to consideration. Deferred revenue is composed mainly of unearned revenue related to our Axon Evidence SaaS platform, secure cloud-based storage, service-type extended warranties, stand-ready obligations in our cartridge programs, and rights to future CED, Axon camera and related accessories hardware in our subscription programs. Revenue for Axon Evidence and cloud-based storage, our service-type extended warranties and stand-ready cartridge programs is generally recognized on a straight-line basis over the subscription term. Revenue for the rights to future hardware is generally recognized at the point in time the hardware products are shipped to the customer. Payment terms and conditions vary by contract type and geography, but our standard terms are that payments are due within 30 days from the date of invoice. The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the year ended December 31, 2023 (in thousands): Year Ended December 31, 2023 2022 2021 Contract assets, net $ 353,489 $ 242,072 $ 210,174 Contract liabilities (deferred revenue) 773,543 608,040 451,312 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 363,341 261,271 177,812 During the year ended December 31, 2023, our contract assets balance increased by $111.4 million, or 46.0%, due to increased sales under subscription plans. Contract liabilities increased $165.5 million, or 27.2%, for the year ended December 31, 2023 due to increased subscription invoicing for Software and Sensors hardware and services in advance of fulfilling performance obligations to customers. Contract liabilities (deferred revenue) consisted of the following (in thousands): December 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 14,773 $ 18,828 $ 33,601 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 33,940 16,036 49,976 26,229 15,338 41,567 48,713 34,864 83,577 40,436 32,956 73,392 Hardware: TASER 42,464 29,689 72,153 49,361 12,640 62,001 Software and Sensors 62,635 117,024 179,659 50,426 109,227 159,653 105,099 146,713 251,812 99,787 121,867 221,654 Services: TASER 7,939 3,983 11,922 7,637 9,501 17,138 Software and Sensors 329,940 96,292 426,232 212,177 83,679 295,856 337,879 100,275 438,154 219,814 93,180 312,994 Total $ 491,691 $ 281,852 $ 773,543 $ 360,037 $ 248,003 $ 608,040 December 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 65,176 $ 52,500 $ 117,676 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 426,515 229,352 655,867 288,832 208,244 497,076 Total $ 491,691 $ 281,852 $ 773,543 $ 360,037 $ 248,003 $ 608,040 Remaining Performance Obligations As of December 31, 2023, we had approximately $7.1 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 December 31, 2023. We currently expect to recognize between approximately 15% - 25% of this balance over the next 12 months, and expect the remainder to be recognized over the following ten years, subject to risks related to delayed deployments, budget appropriation or other contract cancellation clauses. Costs to Obtain a Contract We recognize an asset for the incremental costs of obtaining a contract with a customer, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract and amortized consistent with the recognition timing of the revenue for the underlying performance obligations. For contract costs related to performance obligations with an amortization period of one year or less, we apply the practical expedient to expense these sales commissions when incurred. These costs are recognized as incurred within SG&A expenses on the consolidated statements of operations and comprehensive income. As of December 31, 2023, our assets for costs to obtain contracts were as follows (in thousands): December 31, 2023 December 31, 2022 Current deferred commissions (1) $ 46,335 $ 29,405 Deferred commissions, net of current portion (2) 119,401 93,213 $ 165,736 $ 122,618 (1) Current deferred commissions are included within prepaid expenses and other current assets on the consolidated balance sheets. (2) Deferred commissions, net of current portion, are included in other assets on the consolidated balance sheets. During the years ended December 31, 2023, 2022 and 2021, we recognized $34.0 million, $24.2 million, and $16.6 million, respectively, of amortization related to deferred commissions. These costs are recorded within SG&A expenses on the consolidated statements of operations and comprehensive income (loss). Significant Judgments Our contracts with certain municipal government customers may be subject to budget appropriation, other contract cancellation clauses or future periods that are optional. In contracts where the customer’s performance is subject to budget appropriation clauses, we generally consider the likelihood of non-appropriation to be remote when determining the contract term and transaction price. Contracts with other cancellation provisions or optional periods may require judgment in determining the contract term, including the existence of material rights, determining transaction price and identifying the performance obligations. At times, customers may request changes that either amend, replace or cancel existing contracts. Judgment is required to determine whether the specific facts and circumstances within the contracts require the changes to be accounted for as a separate contract or as a modification. Generally, contract modifications containing additional goods and services that are determined to be distinct and sold at their SSP are accounted for as a separate contract. For contract modifications where both criteria are not met, the original contract is updated and the required adjustments to revenue and contract assets, liabilities and other accounts are made accordingly. Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately rather than together may require significant judgment. We consider CED devices and related accessories, as well as Axon cameras and related accessories, to be separately identifiable from each other as well as from extended warranties on these products and the SaaS subscriptions to Axon Evidence and other cloud services. In contracts where there are timing differences between when we transfer a promised good or service to the customer and when the customer pays for that good or service, we have determined that, with the exception of our TASER 60 installment purchase arrangements, our contracts generally do not include a significant financing component. For the years ended December 31, 2023, 2022, and 2021, we recorded interest income of $0.3 million, $0.6 million and $1.0 million, respectively. Judgment is required to determine the SSP for each distinct performance obligation. We analyze separate sales of our products and services as a basis for estimating the SSP of our products and services and then use that SSP as the basis for allocating the transaction price when our products and services are sold together in a contract with multiple performance obligations. In instances where the SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions, time value of money and other observable inputs. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information such as geographic region and distribution channel in determining the SSP. |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 12 Months Ended |
Dec. 31, 2023 | |
Cash, Cash Equivalents and Investments | |
Cash, Cash Equivalents and Investments | Note 3 - Cash, Cash Equivalents and Investments The following table summarizes our cash, cash equivalents, marketable securities and available-for-sale investments at December 31, 2023 (in thousands): As of December 31, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 406,743 $ — $ — $ 406,743 $ 406,743 $ — $ — $ — Level 1: Money market funds 1,470 — — 1,470 1,470 — — — Agency bonds 222,057 2 (174) 221,885 101,635 — 120,250 — U.S. Government 238,747 120 (237) 238,630 — — 238,630 — Treasury bills 148,063 28 — 148,091 88,697 — 59,394 — Marketable securities 90,000 — (12,060) 77,940 — 77,940 — — Subtotal 700,337 150 (12,471) 688,016 191,802 77,940 418,274 — Level 2: Term deposits 128,205 — — 128,205 — — 128,205 — Corporate bonds 80,646 8 (165) 80,489 — — 80,489 — Treasury Inflation-Protected Securities 2,635 — (5) 2,630 — — 2,630 — Commercial paper 14,456 — — 14,456 — — 14,456 — Subtotal 225,942 8 (170) 225,780 — — 225,780 — Total $ 1,333,022 $ 158 $ (12,641) $ 1,320,539 $ 598,545 $ 77,940 $ 644,054 $ — As of December 31, 2023, we had $420.4 million of available-for-sale investments with unrealized losses. Of this amount, $138.8 million has been in a continuous unrealized loss position for 12 months or longer, with total gross unrealized losses of $0.3 million. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. During the year ended December 31, 2021, we acquired 9,000,000 shares of common stock of Cellebrite DI Ltd. (“CLBT”) with a fair value of $90.0 million. The CLBT common stock is recorded as marketable securities in the consolidated balance sheets and its fair value is adjusted every reporting period. Changes in fair value are recorded in the consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income, net. During the year ended December 31, 2023, we recorded a $38.7 million unrealized gain on marketable securities from our investment in CLBT. The following table summarizes our cash, cash equivalents and available-for-sale investments at December 31, 2022 (in thousands): As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. Government 30,525 — (159) 30,366 — — 30,366 — Treasury Inflation-Protected Securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207 As of December 31, 2022, we had $349.6 million of available-for-sale investments with unrealized losses. Of this amount, $29.7 million was in a continuous unrealized loss position for 12 months or longer, with total gross unrealized losses of $0.9 million. |
Expected Credit Losses
Expected Credit Losses | 12 Months Ended |
Dec. 31, 2023 | |
Expected Credit Losses | |
Expected Credit Losses | Note 4 - Expected Credit Losses We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable, contract assets, notes receivable and off-balance-sheet exposures is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions, and a review of the current status of customers’ trade accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Our monitoring activities include account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. The following table provides a roll-forward of the allowance for expected credit losses for finance receivables and off-balance-sheet exposures. The expected credit losses for receivables is deducted from the amortized cost basis of accounts receivable, contract assets and notes receivable to present the net amount expected to be collected (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 United States Other countries Total United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 $ 3,171 $ 178 $ 3,349 Provision for expected credit losses 815 269 1,084 309 391 700 Amounts written off charged against the allowance (510) (244) (754) (416) — (416) Other, including foreign currency translation — 6 6 — (3) (3) Balance, end of period (1) $ 3,369 $ 597 $ 3,966 $ 3,064 $ 566 $ 3,630 (1) Ending balance includes allowance for credit losses recorded in other current liabilities on the consolidated balance sheets, which is related to off-balance-sheet credit exposure. As of December 31, 2023 and December 31, 2022, the allowance for expected credit losses for each type of customer receivable and off-balance-sheet exposures were as follows (in thousands): December 31, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,392 $ 2,176 Contract assets, net 1,516 1,360 Long-term notes receivable, net of current portion 44 94 Other current liabilities 14 — Total allowance for expected credit losses on customer receivables $ 3,966 $ 3,630 |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2023 | |
Inventory | |
Inventory | Note 5 - Inventory Inventory consisted of the following at December 31, 2023 and December 31, 2022 (in thousands): December 31, 2023 December 31, 2022 Raw materials $ 104,112 $ 72,740 Finished goods 165,743 129,731 Total inventory $ 269,855 $ 202,471 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Property and Equipment | Note 6 - Property and Equipment Property and equipment consisted of the following at December 31, 2023 and December 31, 2022 Estimated Useful Life December 31, 2023 December 31, 2022 Land N/A $ 51,612 $ 51,612 Building and leasehold improvements 3- 39 32,092 25,874 Production equipment 3- 5 105,245 57,170 Computers, equipment and software 3- 5 30,778 25,154 Furniture and office equipment 3- 5 8,383 7,420 Vehicles 5 years 7,451 4,027 Capitalized internal software development costs 3 5 14,799 14,198 Construction-in-process N/A 55,397 62,283 Total cost 305,757 247,738 Less: Accumulated depreciation (105,224) (77,895) Property and equipment, net $ 200,533 $ 169,843 Construction-in-process included $31.0 million and $28.3 million related to the development of our new campus at December 31, 2023 and December 31, 2022, respectively. Depreciation and amortization expense related to property and equipment was $28.1 million, $20.4 million and $15.8 million for the years ended December 31, 2023, 2022 and 2021, respectively, of which $13.6 million, $8.5 million and $6.3 million was included in cost of sales for the respective years. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 7 - Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the year ended December 31, 2023 were as follows (in thousands): Software and TASER Sensors Total Balance, beginning of period $ 2,957 $ 42,026 $ 44,983 Goodwill acquired — 12,751 12,751 Purchase accounting adjustments — (19) (19) Foreign currency translation adjustments 27 203 230 Balance, end of period $ 2,984 $ 54,961 $ 57,945 Intangible assets (other than goodwill) consisted of the following at December 31, 2023 and December 31, 2022 December 31, 2023 December 31, 2022 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 years $ 3,043 $ (2,128) $ 915 $ 3,043 $ (1,823) $ 1,220 Issued patents 5 ‑ 25 years 3,222 (1,707) 1,515 2,981 (1,507) 1,474 Issued trademarks 3 ‑ 15 years 1,333 (817) 516 1,119 (713) 406 Customer relationships 4 ‑ 8 years 5,530 (3,620) 1,910 4,892 (2,995) 1,897 Non-compete agreements 3 ‑ 4 years 448 (448) — 447 (447) — Developed technology 3 ‑ 5 years 29,402 (16,562) 12,840 18,586 (13,244) 5,342 Total amortizable 42,978 (25,282) 17,696 31,068 (20,729) 10,339 Non-amortizable (indefinite-lived) intangible assets: Trademarks 1,068 — 1,068 1,068 — 1,068 Patents and trademarks pending 775 — 775 751 — 751 Total non-amortizable 1,843 — 1,843 1,819 — 1,819 Total intangible assets $ 44,821 $ (25,282) $ 19,539 $ 32,887 $ (20,729) $ 12,158 Amortization expense of intangible assets was $4.5 million, $4.0 million and $2.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. Estimated amortization for intangible assets with definitive lives for the next five years ended December 31, and thereafter, is as follows (in thousands): 2024 $ 5,210 2025 2,375 2026 2,176 2027 1,814 2028 1,755 Thereafter 4,366 Total $ 17,696 |
Strategic Investments
Strategic Investments | 12 Months Ended |
Dec. 31, 2023 | |
Strategic Investments | |
Strategic Investments | Note 8 – Strategic Investments Strategic investments include investments in a number of non-public technology driven companies. We account for strategic investments under ASC 321 measurement alternative for equity securities without readily determinable fair values, as there are no quoted market prices for the investments. The investments are measured at cost less impairment, adjusted for observable price changes and are assessed for impairment whenever events or changes in circumstances indicate that the fair value may be less than its carrying value. In conjunction with certain of our strategic investments, we have the ability to commit additional capital over time through warrants and call options; for some investments, the exercisability and exercise prices are conditional on the achievement of certain performance metrics. The following tables provide a roll-forward of the balance of strategic investments (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call Options Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 $ — $ 83,520 Investments 15,016 1,176 — 16,192 56,914 459 17,233 74,606 Fair value adjustments Unrealized gains — — — — 44,376 28,539 — 72,915 Unrealized losses and impairments (81,196) (1,329) — (82,525) (1,108) — — (1,108) Exercises 1,500 — — 1,500 96,719 (30,089) — 66,630 Balance, end of period $ 212,996 $ 1,501 $ 17,233 $ 231,730 $ 277,676 $ 1,654 $ 17,233 $ 296,563 Inception to date Strategic investments Warrants Call options Total Investments $ 124,498 $ 4,222 $ 17,233 $ 145,953 Fair value adjustments Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses and impairments (82,304) (1,705) — (84,009) Exercises 98,219 (30,089) — 68,130 Sales (14,546) — — (14,546) Balance, end of period $ 212,996 $ 1,501 $ 17,233 $ 231,730 In accordance with ASC 321-10-35-3, we determined an impairment indicator existed for one of our strategic investments as of June 30, 2023. Thus, we performed a quantitative analysis and concluded the fair value was less than the carrying value. An unrealized impairment loss of $73.8 million related to our strategic investment and related warrants was recorded in interest and other income, net on our consolidated statement of operations for the year ended December 31, 2023. |
Other Long-Term Assets
Other Long-Term Assets | 12 Months Ended |
Dec. 31, 2023 | |
Other Long-Term Assets. | |
Other Long-Term Assets | Note 9 - Other Long-Term Assets Other long-term assets consisted of the following at December 31, 2023 and December 31, 2022 December 31, 2023 December 31, 2022 Deferred commissions $ 119,401 $ 93,213 Deferred cost of goods sold 43,678 11,475 Operating lease assets 36,155 38,370 Cash surrender value of corporate-owned life insurance policies 7,558 4,274 Deferred implementation costs 2,175 3,045 Prepaid expenses, deposits and other 11,671 9,239 Total other long-term assets $ 220,638 $ 159,616 |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Liabilities | |
Accrued Liabilities | Note 10 - Accrued Liabilities Accrued liabilities consisted of the following at December 31, 2023 and December 31, 2022 December 31, 2023 December 31, 2022 Accrued salaries, commissions, benefits and bonus $ 125,636 $ 97,882 Accrued professional, consulting and lobbying fees 7,377 3,861 Accrued warranty expense 7,374 811 Accrued income and other taxes 5,784 13,559 Accrued inventory in transit 12,197 10,548 Other accrued expenses 29,862 29,273 Accrued liabilities $ 188,230 $ 155,934 |
Convertible Senior Notes
Convertible Senior Notes | 12 Months Ended |
Dec. 31, 2023 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 11 – Convertible Senior Notes 2027 Notes In December 2022, we issued $690.0 million aggregate principal amount of our 2027 Notes in a private offering, which aggregate principal amount included the exercise in full of the initial purchasers’ option to purchase up to an additional $90.0 million principal amount of the Notes. The Notes mature on December 15, 2027 and bear interest at a fixed rate of 0.50% per annum, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2023. The total net proceeds from the issuance of the Notes, after deducting initial purchasers’ discounts and commissions and estimated debt issuance costs of $16.2 million, were approximately $673.8 million. The effective interest rate for the Notes was 0.99% and included interest payable and amortization of debt issuance cost. If we undergo a fundamental change (as defined in the indenture governing the Notes), holders may require us to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, up to but excluding the fundamental change repurchase date. In addition, following certain corporate events or if we issue a notice of redemption, it will increase the conversion rate for holders who elect to convert their Notes in connection with such corporate event or during the relevant redemption period. The following table summarizes the carrying value of the Notes (in thousands): December 31, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (12,887) (16,033) Convertible notes carrying amount, net $ 677,113 $ 673,967 We consider the fair value of the Notes to be a Level 2 measurement. The estimated fair value of the Notes at December 31, 2023 and December 31, 2022 is based on the closing trading price per $1,000 of the Notes as of the last day of trading for each period as follows (in millions): December 31, 2023 December 31, 2022 2027 Notes $ 873.3 $ 687.3 Interest expense related to the Notes was as follows (in thousands): December 31, 2023 December 31, 2022 Contractual interest expense $ 3,450 $ 211 Amortization of debt issuance costs 3,126 198 Total interest expense $ 6,576 $ 409 Note Hedge To reduce the impact of potential economic dilution upon conversion of the Notes, we entered into a convertible note hedge transaction (the “Note Hedge” or “2027 Note Hedge”) with certain investment banks, with respect to our common stock, concurrently with the issuance of the 2027 Notes. Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 The Note Hedge covers shares of our common stock at a strike price per share that corresponds to the initial conversion price of the respective Notes, subject to adjustment, and is exercisable upon conversion of the Notes. If exercised, we may elect to receive cash, shares of our common stock, or a combination of cash and shares. We have accounted for the aggregate amount of purchase price for the Note Hedge as a reduction to additional paid-in capital. The Note Hedge will expire upon the maturity of the Notes. The Note Hedge is intended to reduce the potential economic dilution upon conversion of the Notes in the event that the market value per share of our common stock at the time of exercise is greater than the conversion price of the Notes. The Note Hedge is a separate transaction and is not part of the terms of the Notes. Holders of the Notes do not have any rights with respect to the Note Hedge. The Note Hedge does not impact earnings per share, as it was entered into to offset any dilution from the Notes. As of December 31, 2023, 3,016,680 shares remain subject to the Note Hedge. Note Warrants Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028 Separately, we entered into warrant transactions with certain investment banks, whereby we sold warrants to acquire, subject to adjustment, the number of shares of our common stock shown in the table above. If the average market value per share of our common stock on each expiration date exceeds the strike price of the Warrants expiring on that day, such Warrants would have a dilutive effect on our earnings per share to the extent we report net income. According to the terms of the Warrants, the Warrants will be automatically exercised over a 60 -trading day period beginning on the first expiration date as set forth above. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 12 - Commitments and Contingencies Data Storage Commitment In June 2022, we entered into a purchase agreement for cloud hosting with a six year term beginning July 1, 2022. The purchase agreement includes a total commitment of $425.0 million. Storage fees under this agreement were $62.4 million for the year ended December 31, 2023. The remaining purchase commitment at December 31, 2023 was $338.8 million. Purchase Commitments We routinely enter into cancelable and non-cancelable purchase orders with many of our key vendors. Based on the strategic relationships with many of these vendors, our ability to cancel these purchase orders and maintain a favorable relationship would be limited. As of December 31, 2023, we had approximately $429.5 million of open purchase orders and $351.2 million of other purchase obligations, inclusive of the data storage commitment noted above. 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 five 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. Antitrust Litigation In January 2020, the U.S. Federal Trade Commission (“FTC”) filed an administrative enforcement action regarding our May 2018 acquisition of an insolvent body-worn camera competitor, Vievu LLC (“Vievu”). The FTC alleged the merger was anticompetitive and adversely affected the body-worn camera and digital evidence management market for “large metropolitan police departments,” which we deny and aggressively defended. On October 6, 2023, the FTC unilaterally dismissed its administrative complaint against Axon without consent decree or other condition. Now pending in the District of New Jersey (Case No. 3:23-cv-7182) 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 not to 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 December 31, 2023, we have determined that it is not reasonably possible that these losses, if any, from 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 December 31, 2023, we had outstanding letters of credit issued under our credit facility of $7.5 million that are expected to expire throughout 2024 and 2025. Additionally, we had $10.5 million of outstanding surety bonds as of December 31, 2023 expiring in 2024. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income Taxes | Note 13 - Income Taxes Income (loss) before provision (benefit) for income taxes included the following components for the years ended December 31 (in thousands): 2023 2022 2021 United States $ 132,448 $ 191,631 $ (146,995) Foreign 22,552 4,887 5,620 Total $ 155,000 $ 196,518 $ (141,375) Significant components of the provision (benefit) for income taxes were as follows for the years ended December 31 (in thousands): 2023 2022 2021 Current: Federal $ 33,084 $ 10,804 $ (331) State 10,371 10,118 85 Foreign 2,804 2,892 (60) Total current 46,259 23,814 (306) Deferred: Federal (61,106) 26,238 (65,557) State (9,244) (2,002) (15,266) Foreign 89 (2,146) 478 Total deferred (70,261) 22,090 (80,345) Tax impact of unrecorded tax benefits liability 4,775 3,475 (706) Provision for income taxes (Income tax benefit) $ (19,227) $ 49,379 $ (81,357) A reconciliation of our effective income tax rate to the federal statutory rate follows for the years ended December 31 (in thousands): 2023 2022 2021 Federal income tax at the statutory rate $ 32,550 $ 41,283 $ (29,691) Excess stock-based compensation benefit (106,522) (4,616) (205,483) Executive compensation limitation 77,350 5,784 180,509 R&D credits (26,204) (13,340) (34,376) Change in valuation allowance (4,695) 10,216 8,961 Change in liability for unrecognized tax benefits 4,351 3,215 10,188 State income taxes, net of federal benefit 3,658 7,928 (12,717) Tax effects of intercompany transactions (2,033) (417) 96 Foreign tax credit (1,922) — — Global intangible low-taxed income 1,890 653 1,250 Other permanent differences (1) 1,201 1,118 592 Difference between statutory and foreign tax rates 1,013 (428) (155) Foreign derived intangible income deduction (961) (2,597) — Return to provision adjustment 346 (757) 204 Other 751 1,337 (735) Provision for income taxes (Income tax benefit) $ (19,227) $ 49,379 $ (81,357) Effective tax rate (12.4) % 25.1 % 57.5 % (1) Other permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, lobbying fees, and nondeductible transaction-related costs. Significant components of our deferred income tax assets and liabilities are as follows at December 31, 2023 and December 31, 2022 2023 2022 Deferred income tax assets: R&D capitalization, net $ 99,746 $ 46,122 Deferred revenue 60,206 47,586 Convertible debt, net 39,649 48,378 R&D tax credit carryforward 16,554 12,826 Reserves, accruals, and other 12,264 9,080 Accrued bonus 11,253 8,652 Stock based compensation 10,544 15,374 Lease liability 9,664 9,973 Strategic investments 6,109 — Amortization 4,425 2,820 Deferred compensation 2,803 1,575 Net operating loss carryforward 2,115 4,874 Inventory reserve 1,986 1,279 Total deferred income tax assets 277,318 208,539 Deferred income tax liabilities: Depreciation (14,575) (10,272) Right of use asset (8,404) (8,748) Prepaid expenses (2,223) (1,119) Customer contract asset (690) (552) Goodwill amortization (313) — Strategic investments — (4,615) Total deferred income tax liabilities (26,205) (25,306) Net deferred income tax assets before valuation allowance 251,113 183,233 Valuation allowance (21,600) (26,368) Net deferred income tax assets $ 229,513 $ 156,865 We have $17.5 million of state net operating losses (“NOLs”) which do not expire until 2041. We have $29.0 million of state R&D credits carrying forward, which expire at various dates between 2024 and 2037 or carry forward indefinitely. In the United Kingdom, we have $4.8 million of NOLs, which may be carried forward indefinitely. In preparing our consolidated financial statements, management assesses the likelihood that its deferred income 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 income tax assets will not be realized. Management exercises significant judgment in determining our provision for income taxes, our deferred income tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred income tax assets. The net change in total valuation allowance for the years ended December 31, 2023, and 2022 was a decrease of $4.8 million and increase of $10.2 million, respectively. The valuation allowance changes are driven primarily by certain state R&D tax credits that are expected to expire unutilized and movement in deferred tax assets associated with unrealized investment losses and transaction costs incurred in connection with certain investments that are not more likely than not to be realized. The net change in the valuation allowance in 2023 and 2022 was recorded to tax expense. We consider the undistributed earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside of the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestment of those subsidiary earnings. We project that our foreign earnings will be utilized offshore for working capital and future foreign growth and we have not made a provision for U.S. or additional foreign withholding taxes of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. We have determined the amount of deferred tax liability related to investments in these foreign subsidiaries is immaterial. If we decide to repatriate the undistributed foreign earnings, we will recognize the income tax effects in the period we change our assertion on indefinite reinvestment. We complete R&D tax credit studies for each year that an R&D tax credit is claimed for federal and state income tax purposes. Management has made the determination that it is more likely than not that the full benefit of the R&D tax credit will not be sustained on examination and recorded a liability for unrecognized tax benefits of $25.8 million as of December 31, 2023. Should the unrecognized benefit of $25.8 million be recognized, our effective tax rate would be favorably impacted. The following table presents a roll forward of our liability for unrecognized tax benefits, exclusive of accrued interest, as of December 31 (in thousands): 2023 2022 2021 Balance, beginning of period $ 21,492 $ 18,249 $ 7,657 Increase (decrease) in previous year tax positions (215) 232 22 Increase in current year tax positions 6,963 3,343 11,416 Decrease due to lapse of statutes of limitations (2,486) (332) (846) Balance, end of period $ 25,754 $ 21,492 $ 18,249 Federal income tax returns for 2020 through 2022 remain open to examination by the U.S. Internal Revenue Service, while state and local income tax returns for 2019 through 2022 also generally remain open to examination by state taxing authorities. The 2009 through 2018 state and local income tax returns are only open to the extent that net operating loss or other tax attributes carrying forward from those years were utilized in 2019 through 2022. The foreign tax returns for 2019 through 2022 also generally remain open to examination, although some foreign statutes can audit returns up to ten years. We recognize interest and penalties related to unrecognized tax benefits within the provision (benefit) for income tax expense line in the consolidated statements of operations and comprehensive income (loss). As of December 31, 2023, and 2022, we had accrued interest of $0.6 million and $0.3 million, respectively. The Tax Cuts and Jobs Act of 2017 contains a provision that subjects a U.S. parent of a foreign subsidiary to current U.S. tax on its global intangible low-taxed income (“GILTI”). GILTI is eligible for a deduction that lowers the effective tax rate on GILTI to 10.5% for calendar years 2018 through 2025 and 13.125% after 2025. We report the tax impact of GILTI as a period cost when incurred. Accordingly, we do not provide deferred taxes for basis differences expected to reverse as GILTI. |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2023 | |
Line of Credit. | |
Line of Credit | Note 14 - Line of Credit In December 2022, we entered into a credit agreement that provides for a senior unsecured multi-currency revolving credit facility in an aggregate principal amount of up to $200.0 million, $30.0 million of which is available for the issuance of letters of credit. The credit agreement will mature on the earlier of December 15, 2027 or the date that is six months prior to the stated maturity date of the 2027 Notes unless the Notes have been redeemed, repurchased, converted or defeased in full. Additionally, the credit agreement has an accordion feature that allows for an increase in the total line of credit up to $300.0 million, in each lender’s sole discretion. As of December 31, 2023, and 2022, respectively, 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 December 31, 2023, we had letters of credit outstanding of approximately $7.5 million under the facility and available borrowing of $192.5 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at Term SOFR plus 1.25 to 1.75% per year determined in accordance with a pricing grid based on our net debt to earnings before interest expense, taxes, depreciation and amortization (“EBITDA”) ratio, which for the purposes of the credit agreement excludes investment interest income. “SOFR” is defined as a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York or a successor administrator of the secured overnight financing rate. We are required to comply with a net leverage ratio, defined as consolidated total indebtedness to EBITDA, of no greater than 3.50 to 1.00 based upon a trailing four fiscal quarter period. At December 31, 2023, our net leverage ratio was 0.10 to 1.00. Additionally, we must comply with a consolidated interest coverage ratio, defined as EBITDA to consolidated interest expense, of no less than 3.50 to 1.00 based upon a trailing four fiscal quarter end. At December 31, 2023, our consolidated interest coverage ratio was 45.61 to 1.00. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | Note 15 - Stockholders’ Equity Common Stock and Preferred Stock We have authorized the issuance of two classes of stock designated as “common stock” and “preferred stock,” each having a par value of $0.00001 per share. We are authorized to issue 200 million shares of common stock and 25 million shares of preferred stock. Stock-based Compensation Plans We have historically utilized stock-based compensation, consisting of RSUs and stock options, for key employees and non-employee directors as a means of attracting and retaining talented personnel. Service-based grants generally have a vesting period of 1 to 5 years 10 years In May 2022, our shareholders approved the Axon Enterprise, Inc. 2022 Stock Incentive Plan (the “2022 Plan”) authorizing an additional 2.5 million shares, plus remaining available shares under prior plans, for issuance under the new plan. Combined with the 2019 Plan and other legacy stock incentive plans, there are 1.7 million shares available for grant as of December 31, 2023. 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-based 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 stock 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. 2018 CEO Performance Award On May 24, 2018, our shareholders approved the Board of Directors’ grant of the 2018 CEO Performance Award to Patrick W. Smith, our Chief Executive Officer. The 2018 CEO Performance Award consists of 12 substantially equal 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 Chief Executive Officer or as both Executive Chairman and Chief Product Officer and service through each attainment date. As of December 31, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. As a result, 6.4 million stock options have vested. As all 12 operational goals have been achieved, we recorded stock-based compensation expense of $246.0 million related to the 2018 CEO Performance Award. As of December 31, 2023, no unrecognized stock-based compensation expense remained. eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the 2019 Plan, which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our 2019 XSPP and grants of 2019 XSUs under the 2019 Plan. As of December 31, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. We recorded stock-based compensation expense of $199.9 million related to the 2019 XSU awards from their respective grant dates through December 31, 2023. As of December 31, 2023, there was no unrecognized stock-based compensation expense. 2024 CEO Performance Award and 2024 eXponential Stock Plan On October 14, 2023, our Board of Directors approved the 2024 eXponential Stock Plan (“XSP 2.0”) and, on December 20, 2023, the Board approved a pool of 4,516,370 shares of the Company’s common stock to be reserved for grants of awards of eXponential Stock Units (“2024 XSUs”) to employees under the plan, including those who elected to have compensation withheld in order to participate in the plan. The 2024 XSUs are grants of performance-based RSUs, each with a term of approximately seven years , that vest in seven substantially equal tranches. Additionally, on December 18, 2023, the Compensation Committee granted to our Chief Executive Officer an award of 2024 XSUs covering 679,102 shares of Company common stock (the “2024 CEO Performance Award”). Both XSP 2.0 and the 2024 CEO Performance Award are subject to shareholder approval at our upcoming Annual Meeting of Shareholders. Dollar-denominated awards granted under XSP 2.0 and the 2024 CEO Performance Award were converted to 2024 XSUs using a price per share of common stock of $220.88 , which reflects the 90 -day volume weighted average price per share as of the trading day preceding the grant date. Neither XSP 2.0 nor the 2024 CEO Performance Award will have a financial statement impact unless and until either or both are approved by shareholders at our Annual Meeting of Shareholders in May 2024 . Restricted Stock Units The following table summarizes RSU activity for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2023 2022 2021 Weighted Weighted Weighted Number Average Number Average Number Average of Grant-Date of Grant-Date of Grant-Date Units Fair Value Units Fair Value Units Fair Value Units outstanding, beginning of year 1,565 $ 145.48 1,115 $ 133.40 1,107 $ 76.10 Granted 915 227.62 1,142 143.03 686 165.67 Released (740) 140.81 (541) 117.49 (554) 66.23 Forfeited (125) 157.95 (151) 138.99 (124) 100.64 Units outstanding, end of year 1,615 193.09 1,565 145.48 1,115 133.40 Aggregate intrinsic value at year end $ 417,240 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $258.33 per share, multiplied by the number of RSUs outstanding. The fair value as of the respective vesting dates of RSUs that vested during the year was $161.7 million, $84.9 million and $96.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, we had $273.5 million of total unrecognized stock-based compensation expense 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 2.29 years. Shares underlying RSUs are released when vesting requirements are met. Certain RSUs that vested in the year ended December 31, 2023 were net-share settled, such that we withheld shares to cover the employees’ tax obligations for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to RSUs during 2023 were approximately 26,000 and had a value of approximately $5.4 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 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 unit (“PSU”) activity, inclusive of 2019 XSUs, for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2023 2022 2021 Weighted Weighted Weighted Number Average Number Average Number Average of Grant-Date of Grant-Date of Grant-Date Units Fair Value Units Fair Value Units Fair Value Units outstanding, beginning of year 1,369 $ 43.43 1,499 $ 39.86 5,618 $ 35.71 Granted 319 218.04 158 106.57 309 77.53 Released (1,238) 37.98 (78) 107.58 (4,345) 37.16 Forfeited (56) 48.40 (210) 41.62 (83) 40.91 Units outstanding, end of year 394 201.61 1,369 43.43 1,499 39.86 Aggregate intrinsic value at year end $ 101,751 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $258.33 per share, multiplied by the number of PSUs outstanding. As of December 31, 2023, there was $57.8 million in 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 2.73 years. PSUs are released when vesting requirements are met. Certain PSUs that vested in the year ended December 31, 2023 were net-share settled such that we withheld shares to cover the employees’ tax obligations 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 0.5 million and had a value of $102.5 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 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 years ended December 31 (number of options in thousands): 2023 2022 2021 Weighted Weighted Weighted Number Average Number Average Number Average of Exercise of Exercise of Exercise Options Price Options Price Options Price Options outstanding, beginning of year 2,438 $ 28.58 2,438 $ 28.58 6,366 $ 28.58 Granted — — — — — Exercised (1,907) 28.58 — — (3,928) 28.58 Expired / terminated — — — — — Options outstanding, end of year 531 28.58 2,438 28.58 2,438 28.58 Options exercisable, end of year 531 28.58 1,377 28.58 1,377 28.58 We did not grant any stock options in 2023, 2022 or 2021. The total intrinsic value of options exercised was $323.0 million and $571.4 million for the years ended December 31, 2023 and 2021, respectively; no The following table summarizes information about stock options that were fully vested or expected to vest as of December 31, 2023 (number of options in thousands): Options Outstanding Options Exercisable Weighted Weighted Weighted Average Weighted Average Number of Average Remaining Number of Average Remaining Range of Options Exercise Contractual Options Exercise Contractual Exercise Price Outstanding Price Life (Years) Exercisable Price Life (Years) $28.58 531 $ 28.58 4.16 531 $ 28.58 4.16 The aggregate intrinsic value of options exercisable at December 31, 2023 was $122.0 million. 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 $258.33 on the last trading day for the period ending December 31, 2023. Stock-based Compensation Expense We account for stock-based compensation using the fair-value method. Reported stock-based compensation expense was classified as follows for the years ended December 31 (in thousands): 2023 2022 2021 Cost of product and service sales $ 6,595 $ 4,607 $ 5,844 Sales, general and administrative expenses 58,533 51,301 238,813 Research and development expenses 66,230 50,268 58,674 Total stock-based compensation expense $ 131,358 $ 106,176 $ 303,331 Income tax benefit $ 13,509 $ 25,154 $ 30,586 Stock Inducement Plan In September 2022, our Board of Directors adopted the Axon Enterprise, Inc. 2022 Stock Inducement Plan (the “2022 Inducement Plan”) pursuant to which we reserved 250,000 shares of common stock for issuance under the 2022 Inducement Plan. In accordance with Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules, awards under the 2022 Inducement Plan may only be made to individuals not previously employed by us (or following such individuals’ bona fide periods of non-employment by us), as an inducement material to the individuals’ entry into employment with us. The terms and conditions of the 2022 Inducement Plan are substantially similar to the Axon Enterprise, Inc. 2019 Stock Inducement Plan. There are approximately 0.1 million shares available for grant as of December 31, 2023. At-the-Market Equity Offering During the year ended December 31, 2023, we sold 467,594 shares of our common stock under our “at-the-market” equity offering program (the “ATM”). We generated approximately $96.4 million in aggregate gross proceeds from sales under the ATM. Aggregate net proceeds from the ATM were $94.7 million after deducting related expenses, including commissions to the sales agent and issuance costs of $1.7 million. During the year ending December 31, 2022, no shares were sold under the ATM. During the year ended December 31, 2021, we sold 577,956 shares of our common stock under the ATM and generated approximately $107.6 million in aggregate gross proceeds from sales under the ATM. Aggregate net proceeds from the ATM were $105.4 million after deducting related expenses, including commissions to the sales agent of $1.6 million and issuance costs of $0.5 million. We may sell up to a total of 3.0 million shares of our common stock under the ATM, of which approximately 2.0 are remaining. The ATM expires on April 20, 2024. We intend to use the net proceeds from the ATM for general corporate purposes, which may include, among other things, providing capital to satisfy a portion of the tax obligations related to the vesting and settlement of stock compensation awards granted to our executive officers and other employees under our stock plans, to support our growth, and to acquire or invest in product lines, products, services, technologies or facilities. 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. As of December 31, 2023 and 2022, $16.3 million remained available under the plan for future purchases. Subsequent Event On December 8, 2023, the Compensation Committee approved a compensation package for our Chief Executive Officer. This compensation package provides for compensation opportunities to Mr. Smith in a lesser amount than the Committee was otherwise willing to provide so that the Company could instead provide enhanced compensation opportunities to other employees of the Company. On January 2, 2024, we granted an aggregate of 0.4 million RSUs to employees whose compensation was under a specified threshold. The RSUs generally vest in five annual installments from March 2024 through March 2028. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss). | |
Accumulated Other Comprehensive Income (Loss) | Note 16 – Accumulated Other Comprehensive Income (loss) The following table reflects the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2020 $ — $ 141 $ 141 Other comprehensive loss (207) (1,251) (1,458) Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (1,044) (4,818) (5,862) Balance, December 31, 2022 $ (1,251) $ (5,928) $ (7,179) Other comprehensive loss 852 (4,352) (3,500) Balance, December 31, 2023 $ (399) $ (10,280) $ (10,679) |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Leases | Note 17 - Leases Lease Obligations We determine if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Additionally, we use the portfolio approach in determining the discount rate used to present value lease payments. We give consideration to our 2027 Notes, line of credit, macroeconomic factors as well as publicly available data for instruments with similar characteristics when estimating our incremental borrowing rates. The ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. We have operating leases for office space and logistical functions. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning on or after January 1, 2019, we account for lease components separately from non-lease components for all asset classes. Our leases have remaining terms of less than one to approximately 10 years, some of which include one or more options to renew for up to five years, and some of which include options to terminate the leases within one year. The exercise of lease renewal options is at our sole discretion and such options are included in ROU assets and liabilities for renewal periods that are reasonably certain of exercise. Certain of our lease agreements include stated rental payment escalations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We had no finance leases as of December 31, 2023. Leases (in thousands) Classification December 31, 2023 December 31, 2022 Assets Operating lease assets Other assets $ 36,155 $ 38,370 Liabilities Current Operating Other current liabilities $ 7,938 $ 6,357 Noncurrent Operating Other long-term liabilities 33,550 37,143 Total lease liabilities $ 41,488 $ 43,500 The components of operating lease expense were as follows for the years ended December 31 (in thousands): Classification 2023 2022 2021 Operating lease expense Sales, general and administrative expenses (1) $ 6,659 $ 4,388 $ 3,820 Research and development expense 3,366 4,315 3,675 Total operating lease expense (2) $ 10,025 $ 8,703 $ 7,495 (1) An immaterial portion of operating lease expense is included within cost of sales. (2) Includes short-term leases, which are immaterial. Other information related to leases was as follows (in thousands, except lease term and discount rate): Twelve Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 8,846 $ 9,216 Right-of-use assets obtained in exchange for lease liabilities: Operating leases 5,927 21,815 Weighted average remaining lease term: Operating leases 7.1 years 7.2 years Weighted average discount rate: Operating leases 6.05 % 5.44 % Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows (in thousands): Operating 2024 10,234 2025 9,864 2026 6,218 2027 3,915 2028 3,855 Thereafter 19,166 Total minimum lease payments 53,252 Less: Amount representing interest (11,764) Present value of lease payments $ 41,488 As of December 31, 2023, we have entered into an additional lease that has not yet commenced, with estimated future minimum lease payments totaling $20.8 million over 12 years . |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2023 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 18 - Employee Benefit Plans We have a defined contribution profit sharing 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 allowed by law of their eligible compensation. We also sponsor defined contribution plans in Australia, Canada, Finland and the United Kingdom. Our matching contributions for all defined contribution plans for the years ended December 31, 2023, 2022 and 2021, were approximately $14.5 million, $10.9 million and $7.4 million, respectively. |
Segment Data
Segment Data | 12 Months Ended |
Dec. 31, 2023 | |
Segment Data | |
Segment Data | Note 19 - Segment Data Our operations comprise two reportable segments: the TASER segment and 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 TASER segment, service revenue also includes digital subscription training content. 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 SG&A expenses by segment. Information relative to our reportable segments was as follows (in thousands): For the year ended December 31, 2023 Software and TASER Sensors Total Net sales from products $ 577,610 $ 390,101 $ 967,711 Net sales from services 34,995 560,685 595,680 Net sales 612,605 950,786 1,563,391 Cost of product sales 238,364 212,354 450,718 Cost of service sales 3,613 153,678 157,291 Cost of sales 241,977 366,032 608,009 Gross margin $ 370,628 $ 584,754 $ 955,382 Research and development $ 62,393 $ 241,326 $ 303,719 For the year ended December 31, 2022 Software and TASER Sensors Total Net sales from products $ 511,010 $ 290,378 $ 801,388 Net sales from services 20,556 367,991 388,547 Net sales 531,566 658,369 1,189,935 Cost of product sales 194,957 168,262 363,219 Cost of service sales — 98,078 98,078 Cost of sales 194,957 266,340 461,297 Gross margin $ 336,609 $ 392,029 $ 728,638 Research and development $ 51,607 $ 182,203 $ 233,810 For the year ended December 31, 2021 Software and TASER Sensors Total Net sales from products $ 426,916 $ 181,609 $ 608,525 Net sales from services 10,011 244,845 254,856 Net sales 436,927 426,454 863,381 Cost of product sales 149,739 110,359 260,098 Cost of service sales 145 62,228 62,373 Cost of sales 149,884 172,587 322,471 Gross margin $ 287,043 $ 253,867 $ 540,910 Research and development $ 46,136 $ 147,890 $ 194,026 |
Business Acquisition
Business Acquisition | 12 Months Ended |
Dec. 31, 2023 | |
Business Acquisition | |
Business Acquisition | Note 20 – Business Acquisition During the year ended December 31, 2023, we completed an acquisition for total purchase consideration of $23.9 million. The purchase price included $2.2 million of contingent cash consideration, which is expected to be earned by the sellers upon meeting specified targets by July 1, 2027. Total transaction costs related to the acquisition were $2.3 million for the year ended December 31, 2023. These transaction costs were expensed as incurred in SG&A expenses in our consolidated statements of operations. The purchase price allocation is subject to revision during the measurement period pending final asset valuation procedures and related calculations. Based on the purchase price allocation, we recorded $12.9 million of goodwill, $11.5 million of identifiable intangible assets, and $2.2 million in net tangible assets, excluding deferred taxes. We recorded a net deferred tax liability of $2.8 million. The goodwill generated from the acquisition is primarily attributable to synergies that are expected to be achieved from the integration of the business and is not deductible for tax purposes. We have assigned the goodwill to the Software and Sensors segment. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Event | |
Subsequent Event | Note 21 – Subsequent Event In January 2024, we acquired the remaining outstanding stock of Fusus, Inc. (“Fusus”), a global leader in real-time crime center technology, for $240.0 million, subject to customary purchase price adjustments. The acquisition expands our ability to aggregate live video, data, and sensor feeds, which enhances situational awareness and investigative capabilities for our customers in public safety, education and enterprise. Prior to this transaction, we had an approximately 20% ownership interest in Fusus. This transaction is considered a “step acquisition” under GAAP whereby our ownership interest in Fusus held before the acquisition is required to be remeasured to fair value at the date of the acquisition. Due to the timing of the transaction, the initial accounting for the acquisition is not yet complete. Transaction costs related to the acquisition were approximately $2.6 million for the year ended December 31, 2023. These transaction costs were expensed as incurred in SG&A in our consolidated statements of operations. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions in these consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit losses, ● valuation of goodwill, intangible and long-lived assets, ● valuation of strategic investments, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, and ● recognition and measurement of contingencies and accrued litigation expense. Actual results could differ materially from those estimates. |
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments Cash, cash equivalents and investments include cash, money market funds, commercial paper, corporate bonds, term deposits, U.S. Government bonds, agency bonds, U.S. Treasury bills and U.S. Treasury Inflation-Protected Securities. We place our cash and cash equivalents with high quality financial institutions. Although we deposit our cash with multiple financial institutions, our deposits regularly exceed federally insured limits. Cash and cash equivalents include funds on hand and highly liquid investments purchased with initial maturity of three months or less. Short-term investments include securities with an expected maturity date within one year of the balance sheet date that do not meet the definition of a cash equivalent, and long-term investments are securities with an expected maturity date greater than one year and less than two years in accordance with our investment policy. We report available-for-sale investments at fair value as of each balance sheet date and record any unrealized gains or losses as a component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in interest and other income, net within the consolidated statements of operations. When the fair value is below the amortized cost of a marketable security, an estimate of expected credit losses is made. The credit-related impairment amount is recognized in the consolidated statements of operations. Credit losses are recognized through the use of an allowance for expected credit losses account in the consolidated balance sheets and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. There were no credit losses recorded on our investment portfolio during the years ended December 31, 2023 and 2022. |
Restricted Cash | Restricted Cash Restricted cash balances of $2.1 million and $1.9 million as of December 31, 2023 and 2022, respectively, primarily relate to funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. As of December 31, 2023, a pproximately $2.0 million was included in prepaid expenses and other assets on our consolidated balance sheet, with the remainder in other long-term assets. |
Inventory | Inventory Inventories are stated at lower of cost or realizable values. Cost of inventories are determined on the first-in, first-out basis utilizing a standard cost methodology. Additional provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. These provisions are based on management’s best estimate after considering historical demand, projected future demand, inventory purchase commitments, industry and market trends and conditions among other factors. We evaluate inventory costs for abnormal costs due to excess production capacity and treat such costs as period costs. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Additions and improvements are capitalized, while ordinary maintenance and repair expenditures are charged to expense as incurred. Depreciation is calculated using the straight-line method over the estimated economic life. |
Software Development Costs | Software Development Costs We expense software development costs, including costs to develop software products or the software component of products and services to be marketed to external users, before technological feasibility of such products is reached. Software development costs also include costs to develop software programs to be used solely to meet our internal needs and applications. We capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the intended function. Additionally, we capitalize qualifying costs incurred for upgrades and enhancements to existing software that result in additional functionality. Costs related to preliminary project planning activities, post-implementation activities, maintenance and minor modifications are expensed as incurred. Internal-use software development costs are amortized on a straight-line basis over the estimated useful life of the software. We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. |
Valuation of Goodwill, Intangibles and Long-lived Assets | Valuation of Goodwill, Intangible 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 events and circumstances could include 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 values computed using discounted cash flows. Finite-lived intangible assets and other long-lived assets are amortized over their estimated useful lives. 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 test goodwill and intangible assets for impairment on an annual basis on December 31, 2023 and on an interim basis when certain events and circumstances exist. During the year ended December 31, 2023, we recorded $0.3 million of impairment charges primarily related to construction in process. During the year ended December 31, 2022, we recorded $5.3 million of impairment charges. Of this total, $3.3 million related to the cease-use of a portion of our Seattle office. An additional $1.4 million related to the decision to slow pacing on construction of our new Scottsdale, Arizona campus. During the year ended December 31, 2021, we recorded an immaterial amount of impairment charges. |
Customer Deposits | Customer Deposits We require deposits in advance of shipment for certain customer sales orders. Additionally, customers may elect to make deposits with us related to contracts for our products and services that were not executed as of the end of a reporting period. Customer deposits are included in other current liabilities in the consolidated balance sheets. |
Revenue Recognition, Deferred Revenue and Accounts and Notes Receivable and Contract Assets | Revenue Recognition, Deferred Revenue and Accounts and Notes Receivable and Contract Assets We derive revenue from two primary sources: (1) the sale of physical products, including conducted energy devices (“CEDs”), Axon cameras, Axon Signal-enabled devices, corresponding hardware extended warranties, and related accessories such as Axon docks, cartridges and batteries, among others, and (2) subscriptions to our Axon Evidence digital evidence management software-as-a-service (“SaaS”) offering (including data storage fees and other ancillary services), which includes varying levels of support. To a lesser extent, we also recognize revenue from training, professional services and other software and SaaS services. We apply the five-step model outlined in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts from Customers (“Topic 606”). For additional discussion of the adoption of Topic 606, see Note 2. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in Topic 606. For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using our estimate of the standalone selling price (“SSP”) of each distinct good or service in the contract. Revenues are recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, each of which is generally distinct and accounted for as a separate performance obligation. Revenue is recognized net of allowances for returns. Performance obligations to deliver products, including CEDs, Axon cameras and related accessories, such as docks, cartridges and batteries, are generally satisfied at the point in time we ship the product, as this is when the customer obtains control of the asset under our standard terms and conditions. In certain contracts with non-standard terms and conditions, these performance obligations may not be satisfied until formal customer acceptance occurs. Performance obligations to fulfill service-type extended warranties and provide our SaaS offerings, including Axon Evidence and other cloud services, are generally satisfied over time as the customer receives and consumes the benefits of these services over the stated service period. Many of our products and services are sold on a standalone basis. We also bundle our hardware products and services together and sell them to our customers in single transactions where the customer can make payments over a multi-year period. These sales may include payments for upfront hardware and services, as well as payments for hardware and services to be provided by us at a future date. Additionally, we offer customers the ability to purchase CED cartridges and certain services on an unlimited basis over the contractual term. Due to the unlimited nature of these arrangements whereby we are obligated to deliver unlimited products at the customer’s request, we account for these arrangements as stand-ready obligations, and recognize revenue ratably over the contract period. Cost of product sales is recognized when control of hardware products or accessories has transferred to the customer. We have elected to recognize shipping costs as an expense in cost of product sales when the control of hardware products or accessories has transferred to the customer. Sales tax collected on sales is netted against government remittances and, thus, recorded on a net basis. The timing of revenue recognition may differ from the timing of invoicing to customers. We generally have an unconditional right to consideration when we invoice our customers and record a receivable. We record a contract asset when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. Contract asset amounts that will be invoiced during the subsequent 12-month period from the balance sheet date are classified as current assets and the remaining portion is recorded within other assets on our consolidated balance sheets. Deferred revenue that will be recognized during the subsequent 12-month period from the balance sheet date is recorded as current deferred revenue and the remaining portion is recorded as long-term deferred revenue. Generally, customers are billed in annual installments. See Note 2 for further disclosures about our contract assets. Sales are typically made on credit, and we generally do not require collateral. We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable, contract assets, notes receivable and off-balance-sheet exposures 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. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. Additionally, specific reserve 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. Accounts and notes receivable, contract assets and off-balance-sheet exposures are presented net of a reserve for expected credit losses, which totaled $4.0 million and $3.6 million as of December 31, 2023 and 2022, respectively. This reserve represents management’s best estimate and application of judgment considering a number of factors, including those listed above. In the event that actual uncollectible amounts differ from our estimates, additional expense could be necessary. |
Cost of Product and Service Sales | Cost of Product and Service Sales Cost of product sales represents manufacturing costs, consisting of materials, labor and overhead related to finished goods and components. Shipping costs incurred related to product delivery are also included in cost of products sold. Cost of service sales includes third-party cloud services, and software maintenance and support costs, including personnel costs, associated with supporting Evidence.com and other software related services. |
Advertising Costs | Advertising Costs We expense advertising costs in the period in which they are incurred. We incurred advertising costs of $1.9 million, $2.3 million and $2.6 million in the years ended December 31, 2023, 2022 and 2021, respectively. Advertising costs are included in sales, general and administrative (“SG&A”) expenses in the consolidated statements of operations. |
Warranty Reserves | Warranty Reserves We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. The company estimates and records a liability for standard warranty at the time products are sold. The estimates are based on historical experience and reflect management’s best estimates of costs to be incurred over the warranty period. Adjustments may be required when actual or projected costs differ. Variations in component failure rates, repair costs and the point of failure within the product life cycle are key drivers that impact our periodic re-assessment of the warranty liability. Revenue related to separately priced extended warranties is initially recorded as deferred revenue at its allocated amount and subsequently recognized as net sales on a straight-line basis over the warranty service period. Costs related to extended warranties are charged to cost of product and service sales when the costs become probable and can be reasonably estimated Changes in our estimated warranty reserve were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Balance, beginning of period $ 811 $ 2,822 $ 769 Utilization of reserve (1,499) (2,209) (873) Warranty expense 8,062 198 2,926 Balance, end of period $ 7,374 $ 811 $ 2,822 |
Research and Development Expenses | Research and Development Expenses We expense as incurred research and development (“R&D”) costs that do not meet the qualifications to be capitalized. We incurred R&D expense of $303.7 million, $233.8 million and $194.0 million in 2023, 2022 and 2021, respectively. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced through the establishment of a valuation allowance if, based upon available evidence, it is determined that it is more likely than not that the deferred tax assets will not be realized. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We also assess whether uncertain tax positions, as filed, could result in the recognition of a liability for possible interest and penalties. Our policy is to include interest and penalties related to unrecognized tax benefits as a component of income tax expense. Refer to Note 13 for additional information regarding the change in unrecognized tax benefits. |
Concentration of Credit Risk and Major Customers / Suppliers | Concentration of Credit Risk and Major Customers / Suppliers Financial instruments that potentially subject us to concentrations of credit risk consist of accounts and notes receivable, contract assets and cash. Historically, we have experienced an immaterial level of write-offs related to uncollectible accounts. We maintain the majority of our cash at two depository institutions. As of December 31, 2023, the aggregate balances in such accounts were $560.4 million. Our balances with these two institutions regularly exceed Federal Deposit Insurance Corporation insured limits for domestic deposits and various deposit insurance programs covering our deposits in Australia, the United Kingdom No customer represented more than 10% of total net sales for the years ended December 31, 2023, 2022 or 2021. At December 31, 2023 and 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off-the-shelf and custom components, including 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 United States, China, Mexico, Republic of Korea, Taiwan and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own substantially all of the injection molded component tooling, designs and test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have experienced supply chain disruptions relating to materials and port constraints, we have remained focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers. |
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 December 31, 2023 were composed of money market funds, commercial paper, corporate bonds, term deposits, U.S. Government bonds, agency bonds, U.S. Treasury bills and U.S. Treasury Inflation-Protected Securities. Cash equivalents and investments at December 31, 2022 were composed of . We have investments in marketable securities, for which changes in fair value are recorded in interest and other income, net in the consolidated statement of operations. We have strategic investments in various unconsolidated affiliates as of December 31, 2023. The estimated fair values of the investments was determined based on Level 3 inputs. We have outstanding our 0.50% convertible senior notes due 2027 (the “Notes” or “2027 Notes”), for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at December 31, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the consolidated balance sheets. |
Segment and Geographic Information | Segment and Geographic Information Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the ‘Software and Sensors” segment); and the manufacture and sale of CEDs, batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as “Axon Cloud revenue.” Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker (“CODM”). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 19. For a summary of net sales by geographic area, see Note 2. The majority of our sales to international customers are transacted in foreign currencies and are attributed to each country based on the shipping address of the distributor or customer. For the years ended December 31, 2023, 2022 and 2021, no individual country outside the United States represented more than 10% of net sales. Substantially all of our assets are located in the United States. |
Stock-Based Compensation | Stock-Based Compensation We recognize expense related to stock-based compensation transactions in which we receive services in exchange for equity instruments of the Company. Stock-based compensation expense for restricted stock units (“RSUs”) is measured based on the closing fair market value of our common stock on the date of grant. When determining the grant date fair value of stock-based awards, we consider whether an adjustment is required to the observable market price or volatility of our common stock used in the valuation as a result of material non-public information. We recognize stock-based compensation expense over the award’s requisite service period on a straight-line basis for time-based RSUs. For performance-based RSUs, stock-based 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 performance-based options with a vesting schedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized 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. For both time-based and performance-based RSUs, we recognize forfeitures as they occur as a reduction to stock-based compensation expense and to additional paid-in-capital. eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the Axon Enterprise, Inc. 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 (“2019 XSPP”) and grants of eXponential Stock Units (“2019 XSUs”) under the plan. The XSUs are grants of performance-based RSUs, each with a term of approximately nine years quarters. As of December 31, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. We recorded stock-based compensation expense of $199.9 million related to the 2019 XSU awards from their respective grant dates through December 31, 2023. As of December 31, 2023, no unrecognized stock-based compensation expense remained under the 2019 XSPP. Stock-based compensation expense associated with 2019 XSU awards is recognized over the longest explicit, implicit or derived service period for each pair of market capitalization and operational goals, beginning at the point in time when the relevant operational goal is considered probable of being met. The market capitalization goal period and the valuation of each tranche are determined using a Monte Carlo simulation, which is also used as the basis for determining the expected achievement period of the market capitalization goal. The probability of meeting an operational goal and the expected achievement point in time for meeting a probable operational goal are based on a subjective assessment of our forward-looking financial projections, taking into consideration statistical analysis. Even though no tranches of the 2019 XSU awards vest unless a market capitalization and a matching operational goal are both achieved, stock-based compensation expense is recognized when an operational goal is considered probable of achievement regardless of whether a market capitalization goal is actually achieved. Given the complexity of the awards, we utilized Monte Carlo simulations to simulate a range of possible future market capitalizations for the Company over the term of the awards at each of the respective grant dates. The average of all iterations of the simulation was used as the basis for the valuation and market capitalization goal derived service period for each tranche. Additionally, we applied an illiquidity discount of between 10.3% and 17.6% to the valuation of 2019 XSUs because the awards specify a post-vest holding period of 2.5 years for the acquired shares that vest. Certain of the 2019 XSU awards specify a post-vest holding period of the longer of 2.5 years or until the next tranche vests. The illiquidity discounts were estimated using the Finnerty model and reduced by the impact of expected payroll and income taxes due upon vesting of the awards, as the related proportion of shares are expected to be sold to satisfy such obligations. We measured the grant date fair value of the 2019 XSU awards with the following assumptions: risk-free interest rate of between 0.5% and 4.1%, expected term of between 5.2 and 8.0 years, expected volatility of between 46.4% and 55.8%, and dividend yield of 0.00%. Stock Options On May 24, 2018, our shareholders approved the Board of Directors’ grant of 6,365,856 performance-based stock options to Patrick W. Smith, our Chief Executive Officer (the “2018 CEO Performance Award”). The 2018 CEO Performance Award consists of 12 substantially equal 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 Chief Executive Officer or as both Executive Chairman and Chief Product Officer and service through each vesting date. Stock-based compensation expense associated with the 2018 CEO Performance Award is recognized over the requisite service period, which is defined as the longer of the expected achievement period for each pair of market capitalization and operational goals, beginning at the point in time when the relevant operational goal is considered probable of being met. As of December 31, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. As a result, 6.4 million stock options have vested. As all 12 operational goals have been achieved, we recorded stock-based compensation expense of $246.0 million related to the 2018 CEO Performance Award. As of December 31, 2023, no unrecognized stock-based compensation expense remained under the 2018 CEO Performance Award. No stock options were awarded during the years ended December 31, 2023, 2022 or 2021. |
Income (Loss) per Common Share | Income (Loss) per Common Share Basic income or loss per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the periods presented. Diluted income (loss) per share reflects the potential dilution from outstanding stock options and unvested RSUs. The effects of outstanding stock options, unvested RSUs, our 2027 Notes and warrants to acquire the number of shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): For the Year Ended December 31, 2023 2022 2021 Numerator for basic and diluted earnings per share: Net income (loss) $ 174,227 $ 147,139 $ (60,018) Denominator: Weighted average shares outstanding-basic 74,195 71,093 66,191 Dilutive effect of stock-based awards 1,261 1,441 — Diluted weighted average shares outstanding 75,456 72,534 66,191 Net income (loss) per common share: Basic $ 2.35 $ 2.07 $ (0.91) Diluted $ 2.31 $ 2.03 $ (0.91) Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): For the Year Ended December 31, 2023 2022 2021 Stock-based awards 1,014 3,264 7,690 2027 Notes 3,017 3,017 — 2027 Warrants 3,017 3,017 — Total potentially dilutive securities 7,048 9,298 7,690 For additional information regarding our 2027 Notes, refer to Note 11. |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires annual and interim disclosures that are expected to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. The new standard is effective for our Annual Report on Form 10-K for the year ending December 31, 2024, and subsequent interim periods, with early adoption permitted. We are currently evaluating the impact of this update on our consolidated financial statements. In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax. The provisions of ASU 2023-09 are effective for our Annual Report on Form 10-K for the year ending December 31, 2025, with early adoption permitted. We are currently evaluating the impact of this update on our consolidated financial statements. |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications are not material and had no effect on the reported results of operations. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Summary of changes in our estimated warranty reserve | Changes in our estimated warranty reserve were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Balance, beginning of period $ 811 $ 2,822 $ 769 Utilization of reserve (1,499) (2,209) (873) Warranty expense 8,062 198 2,926 Balance, end of period $ 7,374 $ 811 $ 2,822 |
Schedule of weighted average number of shares outstanding and earnings per share | The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): For the Year Ended December 31, 2023 2022 2021 Numerator for basic and diluted earnings per share: Net income (loss) $ 174,227 $ 147,139 $ (60,018) Denominator: Weighted average shares outstanding-basic 74,195 71,093 66,191 Dilutive effect of stock-based awards 1,261 1,441 — Diluted weighted average shares outstanding 75,456 72,534 66,191 Net income (loss) per common share: Basic $ 2.35 $ 2.07 $ (0.91) Diluted $ 2.31 $ 2.03 $ (0.91) |
Schedule of potentially dilutive securities excluded in calculation of diluted net income per share | Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): For the Year Ended December 31, 2023 2022 2021 Stock-based awards 1,014 3,264 7,690 2027 Notes 3,017 3,017 — 2027 Warrants 3,017 3,017 — Total potentially dilutive securities 7,048 9,298 7,690 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenues. | |
Summary of Revenue by Product and Service Offering and Geography | The following table presents our revenues by primary product and service offering (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 333,923 — 333,923 $ 282,698 $ — $ 282,698 Cartridges 193,285 — 193,285 181,686 — 181,686 Axon Evidence and Cloud Services 34,775 566,183 600,958 18,752 371,889 390,641 Extended Warranties 31,689 62,577 94,266 29,008 49,765 78,773 Axon Body Cameras and Accessories — 183,023 183,023 — 157,281 157,281 Axon Fleet Systems — 118,129 118,129 — 63,017 63,017 Other (1) (2) 18,933 20,874 39,807 19,422 16,417 35,839 Total $ 612,605 $ 950,786 $ 1,563,391 $ 531,566 $ 658,369 $ 1,189,935 Year Ended December 31, 2021 Software and TASER Sensors Total TASER Devices (Professional) $ 234,616 $ — $ 234,616 Cartridges 152,842 — 152,842 Axon Evidence and Cloud Services 9,159 246,005 255,164 Extended Warranties 24,125 33,686 57,811 Axon Body Cameras and Accessories — 104,080 104,080 Axon Fleet Systems — 24,319 24,319 Other (1) (2) 16,185 18,364 34,549 Total $ 436,927 $ 426,454 $ 863,381 (1) (2) The following table presents our revenues disaggregated by geography (in thousands): Year Ended December 31, 2023 2022 2021 United States $ 1,338,208 86 % $ 987,975 83 % $ 686,914 80 % Other Countries 225,183 14 201,960 17 176,467 20 Total $ 1,563,391 100 % $ 1,189,935 100 % $ 863,381 100 % |
Summary of contract with customer, assets and liabilities | The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the year ended December 31, 2023 (in thousands): Year Ended December 31, 2023 2022 2021 Contract assets, net $ 353,489 $ 242,072 $ 210,174 Contract liabilities (deferred revenue) 773,543 608,040 451,312 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 363,341 261,271 177,812 Contract liabilities (deferred revenue) consisted of the following (in thousands): December 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 14,773 $ 18,828 $ 33,601 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 33,940 16,036 49,976 26,229 15,338 41,567 48,713 34,864 83,577 40,436 32,956 73,392 Hardware: TASER 42,464 29,689 72,153 49,361 12,640 62,001 Software and Sensors 62,635 117,024 179,659 50,426 109,227 159,653 105,099 146,713 251,812 99,787 121,867 221,654 Services: TASER 7,939 3,983 11,922 7,637 9,501 17,138 Software and Sensors 329,940 96,292 426,232 212,177 83,679 295,856 337,879 100,275 438,154 219,814 93,180 312,994 Total $ 491,691 $ 281,852 $ 773,543 $ 360,037 $ 248,003 $ 608,040 December 31, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 65,176 $ 52,500 $ 117,676 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 426,515 229,352 655,867 288,832 208,244 497,076 Total $ 491,691 $ 281,852 $ 773,543 $ 360,037 $ 248,003 $ 608,040 |
Capitalized Contract Cost | As of December 31, 2023, our assets for costs to obtain contracts were as follows (in thousands): December 31, 2023 December 31, 2022 Current deferred commissions (1) $ 46,335 $ 29,405 Deferred commissions, net of current portion (2) 119,401 93,213 $ 165,736 $ 122,618 (1) Current deferred commissions are included within prepaid expenses and other current assets on the consolidated balance sheets. (2) Deferred commissions, net of current portion, are included in other assets on the consolidated balance sheets. |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Cash, Cash Equivalents and Investments | |
Summary of Cash, Cash Equivalents, Marketable Securities, and Available-for-Sale Investments | The following table summarizes our cash, cash equivalents, marketable securities and available-for-sale investments at December 31, 2023 (in thousands): As of December 31, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 406,743 $ — $ — $ 406,743 $ 406,743 $ — $ — $ — Level 1: Money market funds 1,470 — — 1,470 1,470 — — — Agency bonds 222,057 2 (174) 221,885 101,635 — 120,250 — U.S. Government 238,747 120 (237) 238,630 — — 238,630 — Treasury bills 148,063 28 — 148,091 88,697 — 59,394 — Marketable securities 90,000 — (12,060) 77,940 — 77,940 — — Subtotal 700,337 150 (12,471) 688,016 191,802 77,940 418,274 — Level 2: Term deposits 128,205 — — 128,205 — — 128,205 — Corporate bonds 80,646 8 (165) 80,489 — — 80,489 — Treasury Inflation-Protected Securities 2,635 — (5) 2,630 — — 2,630 — Commercial paper 14,456 — — 14,456 — — 14,456 — Subtotal 225,942 8 (170) 225,780 — — 225,780 — Total $ 1,333,022 $ 158 $ (12,641) $ 1,320,539 $ 598,545 $ 77,940 $ 644,054 $ — The following table summarizes our cash, cash equivalents and available-for-sale investments at December 31, 2022 (in thousands): As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. Government 30,525 — (159) 30,366 — — 30,366 — Treasury Inflation-Protected Securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207 |
Expected Credit Losses (Tables)
Expected Credit Losses (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Expected Credit Losses | |
Schedule of roll-forward of allowance for credit losses | The following table provides a roll-forward of the allowance for expected credit losses for finance receivables and off-balance-sheet exposures. The expected credit losses for receivables is deducted from the amortized cost basis of accounts receivable, contract assets and notes receivable to present the net amount expected to be collected (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 United States Other countries Total United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 $ 3,171 $ 178 $ 3,349 Provision for expected credit losses 815 269 1,084 309 391 700 Amounts written off charged against the allowance (510) (244) (754) (416) — (416) Other, including foreign currency translation — 6 6 — (3) (3) Balance, end of period (1) $ 3,369 $ 597 $ 3,966 $ 3,064 $ 566 $ 3,630 (1) Ending balance includes allowance for credit losses recorded in other current liabilities on the consolidated balance sheets, which is related to off-balance-sheet credit exposure. |
Schedule of allowance for expected credit losses for each type of customer receivable | As of December 31, 2023 and December 31, 2022, the allowance for expected credit losses for each type of customer receivable and off-balance-sheet exposures were as follows (in thousands): December 31, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,392 $ 2,176 Contract assets, net 1,516 1,360 Long-term notes receivable, net of current portion 44 94 Other current liabilities 14 — Total allowance for expected credit losses on customer receivables $ 3,966 $ 3,630 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventory | |
Inventory | Inventory consisted of the following at December 31, 2023 and December 31, 2022 (in thousands): December 31, 2023 December 31, 2022 Raw materials $ 104,112 $ 72,740 Finished goods 165,743 129,731 Total inventory $ 269,855 $ 202,471 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Summary of Property and Equipment | Property and equipment consisted of the following at December 31, 2023 and December 31, 2022 Estimated Useful Life December 31, 2023 December 31, 2022 Land N/A $ 51,612 $ 51,612 Building and leasehold improvements 3- 39 32,092 25,874 Production equipment 3- 5 105,245 57,170 Computers, equipment and software 3- 5 30,778 25,154 Furniture and office equipment 3- 5 8,383 7,420 Vehicles 5 years 7,451 4,027 Capitalized internal software development costs 3 5 14,799 14,198 Construction-in-process N/A 55,397 62,283 Total cost 305,757 247,738 Less: Accumulated depreciation (105,224) (77,895) Property and equipment, net $ 200,533 $ 169,843 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets | |
Schedule of Goodwill | The changes in the carrying amount of goodwill for the year ended December 31, 2023 were as follows (in thousands): Software and TASER Sensors Total Balance, beginning of period $ 2,957 $ 42,026 $ 44,983 Goodwill acquired — 12,751 12,751 Purchase accounting adjustments — (19) (19) Foreign currency translation adjustments 27 203 230 Balance, end of period $ 2,984 $ 54,961 $ 57,945 |
Intangible Assets Other than goodwill | Intangible assets (other than goodwill) consisted of the following at December 31, 2023 and December 31, 2022 December 31, 2023 December 31, 2022 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 years $ 3,043 $ (2,128) $ 915 $ 3,043 $ (1,823) $ 1,220 Issued patents 5 ‑ 25 years 3,222 (1,707) 1,515 2,981 (1,507) 1,474 Issued trademarks 3 ‑ 15 years 1,333 (817) 516 1,119 (713) 406 Customer relationships 4 ‑ 8 years 5,530 (3,620) 1,910 4,892 (2,995) 1,897 Non-compete agreements 3 ‑ 4 years 448 (448) — 447 (447) — Developed technology 3 ‑ 5 years 29,402 (16,562) 12,840 18,586 (13,244) 5,342 Total amortizable 42,978 (25,282) 17,696 31,068 (20,729) 10,339 Non-amortizable (indefinite-lived) intangible assets: Trademarks 1,068 — 1,068 1,068 — 1,068 Patents and trademarks pending 775 — 775 751 — 751 Total non-amortizable 1,843 — 1,843 1,819 — 1,819 Total intangible assets $ 44,821 $ (25,282) $ 19,539 $ 32,887 $ (20,729) $ 12,158 |
Estimated Amortization Expense of Intangible Assets | Estimated amortization for intangible assets with definitive lives for the next five years ended December 31, and thereafter, is as follows (in thousands): 2024 $ 5,210 2025 2,375 2026 2,176 2027 1,814 2028 1,755 Thereafter 4,366 Total $ 17,696 |
Strategic Investments (Tables)
Strategic Investments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Strategic Investments | |
Schedule of Roll-Forward of Strategic Investments | The following tables provide a roll-forward of the balance of strategic investments (in thousands): Year Ended December 31, 2023 Year Ended December 31, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call Options Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 $ — $ 83,520 Investments 15,016 1,176 — 16,192 56,914 459 17,233 74,606 Fair value adjustments Unrealized gains — — — — 44,376 28,539 — 72,915 Unrealized losses and impairments (81,196) (1,329) — (82,525) (1,108) — — (1,108) Exercises 1,500 — — 1,500 96,719 (30,089) — 66,630 Balance, end of period $ 212,996 $ 1,501 $ 17,233 $ 231,730 $ 277,676 $ 1,654 $ 17,233 $ 296,563 Inception to date Strategic investments Warrants Call options Total Investments $ 124,498 $ 4,222 $ 17,233 $ 145,953 Fair value adjustments Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses and impairments (82,304) (1,705) — (84,009) Exercises 98,219 (30,089) — 68,130 Sales (14,546) — — (14,546) Balance, end of period $ 212,996 $ 1,501 $ 17,233 $ 231,730 |
Other Long-Term Assets (Tables)
Other Long-Term Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Other Long-Term Assets. | |
Schedule of Other Long-Term Assets | Other long-term assets consisted of the following at December 31, 2023 and December 31, 2022 December 31, 2023 December 31, 2022 Deferred commissions $ 119,401 $ 93,213 Deferred cost of goods sold 43,678 11,475 Operating lease assets 36,155 38,370 Cash surrender value of corporate-owned life insurance policies 7,558 4,274 Deferred implementation costs 2,175 3,045 Prepaid expenses, deposits and other 11,671 9,239 Total other long-term assets $ 220,638 $ 159,616 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accrued Liabilities | |
Schedule of Accrued liabilities | Accrued liabilities consisted of the following at December 31, 2023 and December 31, 2022 December 31, 2023 December 31, 2022 Accrued salaries, commissions, benefits and bonus $ 125,636 $ 97,882 Accrued professional, consulting and lobbying fees 7,377 3,861 Accrued warranty expense 7,374 811 Accrued income and other taxes 5,784 13,559 Accrued inventory in transit 12,197 10,548 Other accrued expenses 29,862 29,273 Accrued liabilities $ 188,230 $ 155,934 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Convertible Senior Notes | |
Schedule of net carrying amount of convertible senior notes | The following table summarizes the carrying value of the Notes (in thousands): December 31, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (12,887) (16,033) Convertible notes carrying amount, net $ 677,113 $ 673,967 We consider the fair value of the Notes to be a Level 2 measurement. The estimated fair value of the Notes at December 31, 2023 and December 31, 2022 is based on the closing trading price per $1,000 of the Notes as of the last day of trading for each period as follows (in millions): December 31, 2023 December 31, 2022 2027 Notes $ 873.3 $ 687.3 |
Schedule of interest expense of convertible senior notes | Interest expense related to the Notes was as follows (in thousands): December 31, 2023 December 31, 2022 Contractual interest expense $ 3,450 $ 211 Amortization of debt issuance costs 3,126 198 Total interest expense $ 6,576 $ 409 |
Schedule of convertible note hedge transaction | Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 |
Schedule of warrants details of convertible senior notes | Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of Income (Loss) before Income Tax, Domestic and Foreign | Income (loss) before provision (benefit) for income taxes included the following components for the years ended December 31 (in thousands): 2023 2022 2021 United States $ 132,448 $ 191,631 $ (146,995) Foreign 22,552 4,887 5,620 Total $ 155,000 $ 196,518 $ (141,375) |
Significant Components of the Provision (Benefit) for Income Taxes | Significant components of the provision (benefit) for income taxes were as follows for the years ended December 31 (in thousands): 2023 2022 2021 Current: Federal $ 33,084 $ 10,804 $ (331) State 10,371 10,118 85 Foreign 2,804 2,892 (60) Total current 46,259 23,814 (306) Deferred: Federal (61,106) 26,238 (65,557) State (9,244) (2,002) (15,266) Foreign 89 (2,146) 478 Total deferred (70,261) 22,090 (80,345) Tax impact of unrecorded tax benefits liability 4,775 3,475 (706) Provision for income taxes (Income tax benefit) $ (19,227) $ 49,379 $ (81,357) |
Reconciliation of the Company's Effective Income Tax Rate to the Federal Statutory Rate | A reconciliation of our effective income tax rate to the federal statutory rate follows for the years ended December 31 (in thousands): 2023 2022 2021 Federal income tax at the statutory rate $ 32,550 $ 41,283 $ (29,691) Excess stock-based compensation benefit (106,522) (4,616) (205,483) Executive compensation limitation 77,350 5,784 180,509 R&D credits (26,204) (13,340) (34,376) Change in valuation allowance (4,695) 10,216 8,961 Change in liability for unrecognized tax benefits 4,351 3,215 10,188 State income taxes, net of federal benefit 3,658 7,928 (12,717) Tax effects of intercompany transactions (2,033) (417) 96 Foreign tax credit (1,922) — — Global intangible low-taxed income 1,890 653 1,250 Other permanent differences (1) 1,201 1,118 592 Difference between statutory and foreign tax rates 1,013 (428) (155) Foreign derived intangible income deduction (961) (2,597) — Return to provision adjustment 346 (757) 204 Other 751 1,337 (735) Provision for income taxes (Income tax benefit) $ (19,227) $ 49,379 $ (81,357) Effective tax rate (12.4) % 25.1 % 57.5 % (1) Other permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, lobbying fees, and nondeductible transaction-related costs. |
Components of Deferred Income Tax Assets and Liabilities | Significant components of our deferred income tax assets and liabilities are as follows at December 31, 2023 and December 31, 2022 2023 2022 Deferred income tax assets: R&D capitalization, net $ 99,746 $ 46,122 Deferred revenue 60,206 47,586 Convertible debt, net 39,649 48,378 R&D tax credit carryforward 16,554 12,826 Reserves, accruals, and other 12,264 9,080 Accrued bonus 11,253 8,652 Stock based compensation 10,544 15,374 Lease liability 9,664 9,973 Strategic investments 6,109 — Amortization 4,425 2,820 Deferred compensation 2,803 1,575 Net operating loss carryforward 2,115 4,874 Inventory reserve 1,986 1,279 Total deferred income tax assets 277,318 208,539 Deferred income tax liabilities: Depreciation (14,575) (10,272) Right of use asset (8,404) (8,748) Prepaid expenses (2,223) (1,119) Customer contract asset (690) (552) Goodwill amortization (313) — Strategic investments — (4,615) Total deferred income tax liabilities (26,205) (25,306) Net deferred income tax assets before valuation allowance 251,113 183,233 Valuation allowance (21,600) (26,368) Net deferred income tax assets $ 229,513 $ 156,865 |
Roll Forward of Liability for Unrecognized Tax Benefits Exclusive of Accrued Interest | The following table presents a roll forward of our liability for unrecognized tax benefits, exclusive of accrued interest, as of December 31 (in thousands): 2023 2022 2021 Balance, beginning of period $ 21,492 $ 18,249 $ 7,657 Increase (decrease) in previous year tax positions (215) 232 22 Increase in current year tax positions 6,963 3,343 11,416 Decrease due to lapse of statutes of limitations (2,486) (332) (846) Balance, end of period $ 25,754 $ 21,492 $ 18,249 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity | |
Summary of Restricted Stock Unit Activity | The following table summarizes RSU activity for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2023 2022 2021 Weighted Weighted Weighted Number Average Number Average Number Average of Grant-Date of Grant-Date of Grant-Date Units Fair Value Units Fair Value Units Fair Value Units outstanding, beginning of year 1,565 $ 145.48 1,115 $ 133.40 1,107 $ 76.10 Granted 915 227.62 1,142 143.03 686 165.67 Released (740) 140.81 (541) 117.49 (554) 66.23 Forfeited (125) 157.95 (151) 138.99 (124) 100.64 Units outstanding, end of year 1,615 193.09 1,565 145.48 1,115 133.40 Aggregate intrinsic value at year end $ 417,240 |
Summary of Performance Stock Unit Activity | The following table summarizes performance stock unit (“PSU”) activity, inclusive of 2019 XSUs, for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2023 2022 2021 Weighted Weighted Weighted Number Average Number Average Number Average of Grant-Date of Grant-Date of Grant-Date Units Fair Value Units Fair Value Units Fair Value Units outstanding, beginning of year 1,369 $ 43.43 1,499 $ 39.86 5,618 $ 35.71 Granted 319 218.04 158 106.57 309 77.53 Released (1,238) 37.98 (78) 107.58 (4,345) 37.16 Forfeited (56) 48.40 (210) 41.62 (83) 40.91 Units outstanding, end of year 394 201.61 1,369 43.43 1,499 39.86 Aggregate intrinsic value at year end $ 101,751 |
Summary of the Company's Stock Options Activity | The following table summarizes stock option activity for the years ended December 31 (number of options in thousands): 2023 2022 2021 Weighted Weighted Weighted Number Average Number Average Number Average of Exercise of Exercise of Exercise Options Price Options Price Options Price Options outstanding, beginning of year 2,438 $ 28.58 2,438 $ 28.58 6,366 $ 28.58 Granted — — — — — Exercised (1,907) 28.58 — — (3,928) 28.58 Expired / terminated — — — — — Options outstanding, end of year 531 28.58 2,438 28.58 2,438 28.58 Options exercisable, end of year 531 28.58 1,377 28.58 1,377 28.58 |
Summary of Stock Options Outstanding and Exercisable | The following table summarizes information about stock options that were fully vested or expected to vest as of December 31, 2023 (number of options in thousands): Options Outstanding Options Exercisable Weighted Weighted Weighted Average Weighted Average Number of Average Remaining Number of Average Remaining Range of Options Exercise Contractual Options Exercise Contractual Exercise Price Outstanding Price Life (Years) Exercisable Price Life (Years) $28.58 531 $ 28.58 4.16 531 $ 28.58 4.16 |
Reported Share-Based Compensation | We account for stock-based compensation using the fair-value method. Reported stock-based compensation expense was classified as follows for the years ended December 31 (in thousands): 2023 2022 2021 Cost of product and service sales $ 6,595 $ 4,607 $ 5,844 Sales, general and administrative expenses 58,533 51,301 238,813 Research and development expenses 66,230 50,268 58,674 Total stock-based compensation expense $ 131,358 $ 106,176 $ 303,331 Income tax benefit $ 13,509 $ 25,154 $ 30,586 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss). | |
Summary of changes in accumulated other comprehensive income (loss), net of tax | The following table reflects the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2020 $ — $ 141 $ 141 Other comprehensive loss (207) (1,251) (1,458) Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (1,044) (4,818) (5,862) Balance, December 31, 2022 $ (1,251) $ (5,928) $ (7,179) Other comprehensive loss 852 (4,352) (3,500) Balance, December 31, 2023 $ (399) $ (10,280) $ (10,679) |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Balance Sheet Disclosures | Leases (in thousands) Classification December 31, 2023 December 31, 2022 Assets Operating lease assets Other assets $ 36,155 $ 38,370 Liabilities Current Operating Other current liabilities $ 7,938 $ 6,357 Noncurrent Operating Other long-term liabilities 33,550 37,143 Total lease liabilities $ 41,488 $ 43,500 |
Components of Lease Expense | The components of operating lease expense were as follows for the years ended December 31 (in thousands): Classification 2023 2022 2021 Operating lease expense Sales, general and administrative expenses (1) $ 6,659 $ 4,388 $ 3,820 Research and development expense 3,366 4,315 3,675 Total operating lease expense (2) $ 10,025 $ 8,703 $ 7,495 (1) An immaterial portion of operating lease expense is included within cost of sales. (2) Includes short-term leases, which are immaterial. Other information related to leases was as follows (in thousands, except lease term and discount rate): Twelve Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 8,846 $ 9,216 Right-of-use assets obtained in exchange for lease liabilities: Operating leases 5,927 21,815 Weighted average remaining lease term: Operating leases 7.1 years 7.2 years Weighted average discount rate: Operating leases 6.05 % 5.44 % |
Schedule of Future Minimum Rental Payments For Operating Leases | Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows (in thousands): Operating 2024 10,234 2025 9,864 2026 6,218 2027 3,915 2028 3,855 Thereafter 19,166 Total minimum lease payments 53,252 Less: Amount representing interest (11,764) Present value of lease payments $ 41,488 |
Segment Data (Tables)
Segment Data (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Data | |
Summary of Operational Information Relative to the Company's Reportable Segments | Information relative to our reportable segments was as follows (in thousands): For the year ended December 31, 2023 Software and TASER Sensors Total Net sales from products $ 577,610 $ 390,101 $ 967,711 Net sales from services 34,995 560,685 595,680 Net sales 612,605 950,786 1,563,391 Cost of product sales 238,364 212,354 450,718 Cost of service sales 3,613 153,678 157,291 Cost of sales 241,977 366,032 608,009 Gross margin $ 370,628 $ 584,754 $ 955,382 Research and development $ 62,393 $ 241,326 $ 303,719 For the year ended December 31, 2022 Software and TASER Sensors Total Net sales from products $ 511,010 $ 290,378 $ 801,388 Net sales from services 20,556 367,991 388,547 Net sales 531,566 658,369 1,189,935 Cost of product sales 194,957 168,262 363,219 Cost of service sales — 98,078 98,078 Cost of sales 194,957 266,340 461,297 Gross margin $ 336,609 $ 392,029 $ 728,638 Research and development $ 51,607 $ 182,203 $ 233,810 For the year ended December 31, 2021 Software and TASER Sensors Total Net sales from products $ 426,916 $ 181,609 $ 608,525 Net sales from services 10,011 244,845 254,856 Net sales 436,927 426,454 863,381 Cost of product sales 149,739 110,359 260,098 Cost of service sales 145 62,228 62,373 Cost of sales 149,884 172,587 322,471 Gross margin $ 287,043 $ 253,867 $ 540,910 Research and development $ 46,136 $ 147,890 $ 194,026 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Narrative (Details) | 12 Months Ended | 59 Months Ended | 67 Months Ended | ||||
Feb. 12, 2019 USD ($) item tranche | May 24, 2018 tranche shares | Dec. 31, 2023 USD ($) item customer segment shares | Dec. 31, 2022 USD ($) customer shares | Dec. 31, 2021 USD ($) customer shares | Dec. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Summary Of Significant Accounting Policy [Line Items] | |||||||
Restricted cash balance | $ 2,100,000 | $ 1,900,000 | $ 2,100,000 | $ 2,100,000 | |||
Restricted cash including prepaid expenses and other assets | $ 2,000,000 | 2,000,000 | 2,000,000 | ||||
Number of primary revenue sources | item | 2 | ||||||
Reserve for expected credit losses | $ 3,966,000 | 3,630,000 | $ 3,349,000 | 3,966,000 | 3,966,000 | ||
Additional credit loss expense | 1,084,000 | 700,000 | |||||
Sales, general and administrative | 496,874,000 | 401,575,000 | 515,007,000 | ||||
Research and development costs | $ 303,719,000 | 233,810,000 | $ 194,026,000 | ||||
Number of depository institutions | item | 2 | ||||||
Aggregate balances in depository institution accounts | $ 560,400,000 | 560,400,000 | 560,400,000 | ||||
Cash surrender value of corporate-owned life insurance policies | 7,558,000 | $ 4,274,000 | 7,558,000 | 7,558,000 | |||
Denomination of notes used for determination of fair value | $ 1,000 | 1,000 | 1,000 | ||||
Number of reportable segments of company | segment | 2 | ||||||
Recorded share-based compensation expense | 246,000,000 | ||||||
Number of options, granted (in shares) | shares | 0 | 0 | 0 | ||||
Credit loss | $ 0 | $ 0 | |||||
Impairment charges | $ 300,000 | $ 5,300,000 | |||||
Net Sales | Geographic Concentration Risk | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Number of countries outside the U.S. representing more than 10% of total net sales | 0 | 0 | 0 | ||||
Net Sales | Customer Concentration Risk | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Number of major customers | customer | 0 | 0 | 0 | ||||
Accounts and notes receivable and contract assets | Customer Concentration Risk | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Number of major customers | customer | 0 | 0 | |||||
Advertising | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Sales, general and administrative | $ 1,900,000 | $ 2,300,000 | $ 2,600,000 | ||||
eXponential Stock Units | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Unrecognized stock-based compensation expense | $ 0 | 0 | 0 | ||||
Performance Shares | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Number of options, granted (in shares) | shares | 6,365,856 | ||||||
Chief Executive Officer | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Number of award tranches | tranche | 12 | ||||||
Number of operational goals | item | 12 | ||||||
Chief Executive Officer | Performance Shares | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Number of options vested | shares | 6,400,000 | ||||||
Number of operational goals | item | 12 | ||||||
Recorded share-based compensation expense | $ 246,000,000 | ||||||
Unrecognized stock-based compensation expense | $ 0 | 0 | 0 | ||||
2019 eXponential Stock Performance Plan | eXponential Stock Units | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Restricted stock, expiration period | 9 years | ||||||
Number of award tranches | tranche | 12 | ||||||
Market capitalization goal | $ 2,500,000,000 | ||||||
Market capitalization goal increment | $ 1,000,000,000 | ||||||
Number of performance goals, revenue | item | 8 | ||||||
Number of operational goals | item | 12 | ||||||
Recorded share-based compensation expense | $ 199,900,000 | 199,900,000 | |||||
Unrecognized stock-based compensation expense | $ 0 | $ 0 | $ 0 | ||||
Post-vest holding period | 2 years 6 months | ||||||
Expected dividend yield (as percentage) | 0% | 0% | 0% | ||||
Minimum | 2019 eXponential Stock Performance Plan | eXponential Stock Units | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Liquidity discount (as percentage) | 10.30% | 10.30% | 10.30% | ||||
Risk-free interest rate (as percentage) | 0.50% | ||||||
Expected life of options | 5 years 2 months 12 days | ||||||
Expected volatility (as percentage) | 46.40% | ||||||
Maximum | 2019 eXponential Stock Performance Plan | eXponential Stock Units | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Liquidity discount (as percentage) | 17.60% | 17.60% | 17.60% | ||||
Risk-free interest rate (as percentage) | 4.10% | ||||||
Expected life of options | 8 years | ||||||
Expected volatility (as percentage) | 55.80% | ||||||
2027 Notes | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Denomination of notes used for determination of fair value | $ 1,000 | $ 1,000 | $ 1,000 | $ 1,000 | |||
Interest rate (as a percent) | 0.50% | 0.50% | 0.50% | 0.50% | |||
Seattle office | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Impairment of long-lived assets to be disposed | $ 3,300,000 | ||||||
Scottsdale, Arizona campus | |||||||
Summary Of Significant Accounting Policy [Line Items] | |||||||
Impairment of ongoing project | $ 1,400,000 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Summary of Changes in Estimated Warranty Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Movement in Standard and Extended Product Warranty | |||
Balance, beginning of period | $ 811 | $ 2,822 | $ 769 |
Utilization of reserve | (1,499) | (2,209) | (873) |
Warranty expense | 8,062 | 198 | 2,926 |
Balance, end of period | $ 7,374 | $ 811 | $ 2,822 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Weighted Average Number of Shares Outstanding and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator for basic and diluted earnings per share: | |||
Net income (loss) | $ 174,227 | $ 147,139 | $ (60,018) |
Denominator: | |||
Weighted average shares outstanding - basic (in shares) | 74,195 | 71,093 | 66,191 |
Dilutive effect of stock-based awards (in shares) | 1,261 | 1,441 | |
Diluted weighted average shares outstanding (in shares) | 75,456 | 72,534 | 66,191 |
Net income (loss) per common share: | |||
Basic (in dollars per share) | $ 2.35 | $ 2.07 | $ (0.91) |
Diluted (in dollars per share) | $ 2.31 | $ 2.03 | $ (0.91) |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Antidilutive Securities Excluded From Computation of EPS (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 7,048 | 9,298 | 7,690 |
Stock-based awards | |||
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 1,014 | 3,264 | 7,690 |
2027 Notes | |||
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 3,017 | 3,017 | |
2027 Warrants | |||
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 3,017 | 3,017 |
Revenues - Revenues by Products
Revenues - Revenues by Products and Service Offerings (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 1,563,391 | $ 1,189,935 | $ 863,381 |
TASER Devices (Professional) | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 333,923 | 282,698 | 234,616 |
Cartridges | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 193,285 | 181,686 | 152,842 |
Axon Evidence and Cloud Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 600,958 | 390,641 | 255,164 |
Extended Warranties | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 94,266 | 78,773 | 57,811 |
Axon Body Cameras and Accessories | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 183,023 | 157,281 | 104,080 |
Axon Fleet Systems | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 118,129 | 63,017 | 24,319 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 39,807 | 35,839 | 34,549 |
TASER | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 612,605 | 531,566 | 436,927 |
TASER | TASER Devices (Professional) | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 333,923 | 282,698 | 234,616 |
TASER | Cartridges | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 193,285 | 181,686 | 152,842 |
TASER | Axon Evidence and Cloud Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 34,775 | 18,752 | 9,159 |
TASER | Extended Warranties | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 31,689 | 29,008 | 24,125 |
TASER | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 18,933 | 19,422 | 16,185 |
Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 950,786 | 658,369 | 426,454 |
Software and Sensors | Axon Evidence and Cloud Services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 566,183 | 371,889 | 246,005 |
Software and Sensors | Extended Warranties | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 62,577 | 49,765 | 33,686 |
Software and Sensors | Axon Body Cameras and Accessories | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 183,023 | 157,281 | 104,080 |
Software and Sensors | Axon Fleet Systems | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 118,129 | 63,017 | 24,319 |
Software and Sensors | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 20,874 | $ 16,417 | $ 18,364 |
Revenues - Revenues By Geograph
Revenues - Revenues By Geographic Area (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 1,563,391 | $ 1,189,935 | $ 863,381 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 1,338,208 | 987,975 | 686,914 |
Other countries | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 225,183 | $ 201,960 | $ 176,467 |
Revenue from Contract with Customer | Geographic Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk (as a percentage) | 100% | 100% | 100% |
Revenue from Contract with Customer | Geographic Concentration Risk | United States | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk (as a percentage) | 86% | 83% | 80% |
Revenue from Contract with Customer | Geographic Concentration Risk | Other countries | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk (as a percentage) | 14% | 17% | 20% |
Revenues - Additional Informati
Revenues - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Unbilled accounts receivable | $ 4.8 | ||
Payment due date from date of invoice | 30 days | ||
Taser 60 Plan | |||
Disaggregation of Revenue [Line Items] | |||
Interest income | $ 0.3 | $ 0.6 | $ 1 |
SG&A expenses | |||
Disaggregation of Revenue [Line Items] | |||
Amortization related to deferred commissions | $ 34 | $ 24.2 | $ 16.6 |
Revenues - Contract Assets, Con
Revenues - Contract Assets, Contract Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues. | |||
Contract assets, net | $ 353,489 | $ 242,072 | $ 210,174 |
Contract liabilities (deferred revenue) | 773,543 | 608,040 | 451,312 |
Revenue recognized in the period from: | |||
Amounts included in contract liabilities at the beginning of the period | 363,341 | $ 261,271 | $ 177,812 |
Contract assets, balance increase | $ 111,400 | ||
Contract assets, percentage increase | 46% | ||
Contract liabilities, balance increase | $ 165,500 | ||
Contract liabilities, percentage increase | 27.20% |
Revenues - Summary of Deferred
Revenues - Summary of Deferred Revenue (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Disaggregation of Revenue [Line Items] | |||
Current | $ 491,691 | $ 360,037 | |
Long-Term | 281,852 | 248,003 | |
Total | 773,543 | 608,040 | $ 451,312 |
TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 65,176 | 71,205 | |
Long-Term | 52,500 | 39,759 | |
Total | 117,676 | 110,964 | |
Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 426,515 | 288,832 | |
Long-Term | 229,352 | 208,244 | |
Total | 655,867 | 497,076 | |
Warranty | |||
Disaggregation of Revenue [Line Items] | |||
Current | 48,713 | 40,436 | |
Long-Term | 34,864 | 32,956 | |
Total | 83,577 | 73,392 | |
Warranty | TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 14,773 | 14,207 | |
Long-Term | 18,828 | 17,618 | |
Total | 33,601 | 31,825 | |
Warranty | Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 33,940 | 26,229 | |
Long-Term | 16,036 | 15,338 | |
Total | 49,976 | 41,567 | |
Hardware | |||
Disaggregation of Revenue [Line Items] | |||
Current | 105,099 | 99,787 | |
Long-Term | 146,713 | 121,867 | |
Total | 251,812 | 221,654 | |
Hardware | TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 42,464 | 49,361 | |
Long-Term | 29,689 | 12,640 | |
Total | 72,153 | 62,001 | |
Hardware | Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 62,635 | 50,426 | |
Long-Term | 117,024 | 109,227 | |
Total | 179,659 | 159,653 | |
Software and Sensors. | |||
Disaggregation of Revenue [Line Items] | |||
Current | 337,879 | 219,814 | |
Long-Term | 100,275 | 93,180 | |
Total | 438,154 | 312,994 | |
Software and Sensors. | TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 7,939 | 7,637 | |
Long-Term | 3,983 | 9,501 | |
Total | 11,922 | 17,138 | |
Software and Sensors. | Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 329,940 | 212,177 | |
Long-Term | 96,292 | 83,679 | |
Total | $ 426,232 | $ 295,856 |
Revenues - Remaining Performanc
Revenues - Remaining Performance Obligations (Details) $ in Billions | Dec. 31, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 7.1 |
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation to be recognized in the next twelve months (as a percentage) | 15% |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation to be recognized in the next twelve months (as a percentage) | 25% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2030-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 10 years |
Revenues - Cost to Obtain Contr
Revenues - Cost to Obtain Contracts with Customer (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Revenues. | ||
Current deferred commissions | $ 46,335 | $ 29,405 |
Deferred commissions, net of current portion | 119,401 | 93,213 |
Deferred sales commission | $ 165,736 | $ 122,618 |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | $ 1,333,022 | $ 1,183,222 | |
Gross Unrealized Gains | 158 | 57 | |
Gross Unrealized Losses | (12,641) | (52,379) | |
Fair Value | 1,320,539 | 1,130,900 | |
Cash and Cash Equivalents | 598,545 | 353,684 | |
Marketable Securities | 77,940 | 39,240 | |
Short-Term Investments | 644,054 | 581,769 | |
Long-Term Investments | 156,207 | ||
Marketable securities, unrealized gain | 38,700 | ||
Debt securities, available-for-sale, unrealized Loss | 420,400 | 349,600 | |
Continuous unrealized loss position of available-for-sale investments, unrealized losses | 138,800 | 29,700 | |
Continuous unrealized loss position of available-for-sale investments, gross unrealized losses | 300 | 900 | |
Share Purchase Agreement with CLBT | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Marketable Securities | $ 90,000 | ||
Investment owned, shares held | 9,000,000 | ||
Investment, type | Common Stock | ||
Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 700,337 | 378,805 | |
Gross Unrealized Gains | 150 | 24 | |
Gross Unrealized Losses | (12,471) | (51,026) | |
Fair Value | 688,016 | 327,803 | |
Cash and Cash Equivalents | 191,802 | 115,769 | |
Marketable Securities | 77,940 | 39,240 | |
Short-Term Investments | 418,274 | 78,427 | |
Long-Term Investments | 94,367 | ||
Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 225,942 | 660,673 | |
Gross Unrealized Gains | 8 | 33 | |
Gross Unrealized Losses | (170) | (1,353) | |
Fair Value | 225,780 | 659,353 | |
Cash and Cash Equivalents | 94,171 | ||
Short-Term Investments | 225,780 | 503,342 | |
Long-Term Investments | 61,840 | ||
Cash | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 406,743 | 143,744 | |
Fair Value | 406,743 | 143,744 | |
Cash and Cash Equivalents | 406,743 | 143,744 | |
Money market funds | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 1,470 | 2,669 | |
Fair Value | 1,470 | 2,669 | |
Cash and Cash Equivalents | 1,470 | 2,669 | |
Agency bonds | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 222,057 | 164,486 | |
Gross Unrealized Gains | 2 | 6 | |
Gross Unrealized Losses | (174) | (263) | |
Fair Value | 221,885 | 164,229 | |
Cash and Cash Equivalents | 101,635 | ||
Short-Term Investments | 120,250 | 69,862 | |
Long-Term Investments | 94,367 | ||
Treasury bills | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 148,063 | 121,650 | |
Gross Unrealized Gains | 28 | 18 | |
Gross Unrealized Losses | (3) | ||
Fair Value | 148,091 | 121,665 | |
Cash and Cash Equivalents | 88,697 | 113,100 | |
Short-Term Investments | 59,394 | 8,565 | |
Marketable securities | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 90,000 | 90,000 | |
Gross Unrealized Losses | (12,060) | (50,760) | |
Fair Value | 77,940 | 39,240 | |
Marketable Securities | 77,940 | 39,240 | |
State and municipal obligations | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 4,980 | ||
Gross Unrealized Losses | (33) | ||
Fair Value | 4,947 | ||
Short-Term Investments | 4,947 | ||
Certificates of deposits | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 5,002 | ||
Fair Value | 5,002 | ||
Short-Term Investments | 5,002 | ||
Term deposits | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 128,205 | 200,000 | |
Fair Value | 128,205 | 200,000 | |
Cash and Cash Equivalents | 25,000 | ||
Short-Term Investments | 128,205 | 175,000 | |
Corporate bonds | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 80,646 | 257,422 | |
Gross Unrealized Gains | 8 | 33 | |
Gross Unrealized Losses | (165) | (1,159) | |
Fair Value | 80,489 | 256,296 | |
Cash and Cash Equivalents | 28,883 | ||
Short-Term Investments | 80,489 | 168,074 | |
Long-Term Investments | 59,339 | ||
Commercial paper | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 14,456 | 160,241 | |
Fair Value | 14,456 | 160,241 | |
Cash and Cash Equivalents | 40,288 | ||
Short-Term Investments | 14,456 | 119,953 | |
U.S. Government | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 238,747 | ||
Gross Unrealized Gains | 120 | ||
Gross Unrealized Losses | (237) | ||
Fair Value | 238,630 | ||
Short-Term Investments | 238,630 | ||
U.S. Government | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 30,525 | ||
Gross Unrealized Losses | (159) | ||
Fair Value | 30,366 | ||
Short-Term Investments | 30,366 | ||
Treasury Inflation-Protected Securities | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 2,635 | 2,503 | |
Gross Unrealized Losses | (5) | (2) | |
Fair Value | 2,630 | 2,501 | |
Short-Term Investments | $ 2,630 | ||
Long-Term Investments | $ 2,501 |
Expected Credit Losses (Details
Expected Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | $ 3,630 | $ 3,349 |
Provision for expected credit losses | 1,084 | 700 |
Amounts written off charged against the allowance | (754) | (416) |
Other, including foreign currency translation | 6 | (3) |
Balance, end of period | 3,966 | 3,630 |
United States | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | 3,064 | 3,171 |
Provision for expected credit losses | 815 | 309 |
Amounts written off charged against the allowance | (510) | (416) |
Balance, end of period | 3,369 | 3,064 |
Other countries | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | 566 | 178 |
Provision for expected credit losses | 269 | 391 |
Amounts written off charged against the allowance | (244) | |
Other, including foreign currency translation | 6 | (3) |
Balance, end of period | $ 597 | $ 566 |
Expected Credit Losses - Type O
Expected Credit Losses - Type Of Customer Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Expected Credit Losses | ||
Accounts receivable and notes receivable, current | $ 2,392 | $ 2,176 |
Contract assets, net | 1,516 | 1,360 |
Long-term notes receivable, net of current portion | 44 | 94 |
Other current liabilities | 14 | |
Total allowance for expected credit losses on customer receivables | $ 3,966 | $ 3,630 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Inventory | ||
Raw materials | $ 104,112 | $ 72,740 |
Finished goods | 165,743 | 129,731 |
Total inventory | $ 269,855 | $ 202,471 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 305,757 | $ 247,738 | |
Less: Accumulated depreciation | (105,224) | (77,895) | |
Property and equipment, net | 200,533 | 169,843 | |
Depreciation expense | 28,100 | 20,400 | $ 15,800 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | 51,612 | 51,612 | |
Building and leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 32,092 | 25,874 | |
Building and leasehold improvements | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 3 years | ||
Building and leasehold improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 39 years | ||
Production equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 105,245 | 57,170 | |
Production equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 3 years | ||
Production equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 5 years | ||
Computers, equipment and software | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 30,778 | 25,154 | |
Computers, equipment and software | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 3 years | ||
Computers, equipment and software | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 5 years | ||
Furniture and office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 8,383 | 7,420 | |
Furniture and office equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 3 years | ||
Furniture and office equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 5 years | ||
Vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 5 years | ||
Total cost | $ 7,451 | 4,027 | |
Capitalized internal software development costs | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 14,799 | 14,198 | |
Capitalized internal software development costs | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 3 years | ||
Capitalized internal software development costs | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Estimated Useful Life | 5 years | ||
Construction-in-process | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 55,397 | $ 62,283 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization expense relative to property and equipment | $ 28,100 | $ 20,400 | $ 15,800 |
Total cost | 305,757 | 247,738 | |
Cost of sales | 608,009 | 461,297 | 322,471 |
Property, Plant and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Cost of sales | 13,600 | 8,500 | $ 6,300 |
Capitalized internal software development costs | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | 14,799 | 14,198 | |
Construction-in-progress related to development | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 31,000 | $ 28,300 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Changes in carrying amount of goodwill | |
Balance, beginning of period | $ 44,983 |
Goodwill acquired | 12,751 |
Purchase accounting adjustments | (19) |
Foreign currency translation adjustments | 230 |
Balance, end of period | 57,945 |
TASER | |
Changes in carrying amount of goodwill | |
Balance, beginning of period | 2,957 |
Foreign currency translation adjustments | 27 |
Balance, end of period | 2,984 |
Software and Sensors | |
Changes in carrying amount of goodwill | |
Balance, beginning of period | 42,026 |
Goodwill acquired | 12,751 |
Purchase accounting adjustments | (19) |
Foreign currency translation adjustments | 203 |
Balance, end of period | $ 54,961 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Definite-Lived Intangible Assets Other than Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 42,978 | $ 31,068 | |
Accumulated Amortization | (25,282) | (20,729) | |
Total | 17,696 | 10,339 | |
Not amortized, Gross Carrying Amount | 1,843 | 1,819 | |
Intangible assets, Gross Carrying Amount | 44,821 | 32,887 | |
Intangible assets, Net Carrying Amount | 19,539 | 12,158 | |
Amortization expense of intangible assets | 4,500 | 4,000 | $ 2,900 |
Trademark | |||
Intangible Assets [Line Items] | |||
Not amortized, Gross Carrying Amount | 1,068 | 1,068 | |
Patents and trademarks pending | |||
Intangible Assets [Line Items] | |||
Not amortized, Gross Carrying Amount | 775 | 751 | |
Domain names | |||
Intangible Assets [Line Items] | |||
Gross Carrying Amount | 3,043 | 3,043 | |
Accumulated Amortization | (2,128) | (1,823) | |
Total | $ 915 | 1,220 | |
Domain names | Minimum | |||
Intangible Assets [Line Items] | |||
Useful Life | 5 years | ||
Domain names | Maximum | |||
Intangible Assets [Line Items] | |||
Useful Life | 10 years | ||
Issued patents | |||
Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 3,222 | 2,981 | |
Accumulated Amortization | (1,707) | (1,507) | |
Total | $ 1,515 | 1,474 | |
Issued patents | Minimum | |||
Intangible Assets [Line Items] | |||
Useful Life | 5 years | ||
Issued patents | Maximum | |||
Intangible Assets [Line Items] | |||
Useful Life | 25 years | ||
Issued trademarks | |||
Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 1,333 | 1,119 | |
Accumulated Amortization | (817) | (713) | |
Total | $ 516 | 406 | |
Issued trademarks | Minimum | |||
Intangible Assets [Line Items] | |||
Useful Life | 3 years | ||
Issued trademarks | Maximum | |||
Intangible Assets [Line Items] | |||
Useful Life | 15 years | ||
Customer relationships | |||
Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 5,530 | 4,892 | |
Accumulated Amortization | (3,620) | (2,995) | |
Total | $ 1,910 | 1,897 | |
Customer relationships | Minimum | |||
Intangible Assets [Line Items] | |||
Useful Life | 4 years | ||
Customer relationships | Maximum | |||
Intangible Assets [Line Items] | |||
Useful Life | 8 years | ||
Non-compete agreements | |||
Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 448 | 447 | |
Accumulated Amortization | $ (448) | (447) | |
Non-compete agreements | Minimum | |||
Intangible Assets [Line Items] | |||
Useful Life | 3 years | ||
Non-compete agreements | Maximum | |||
Intangible Assets [Line Items] | |||
Useful Life | 4 years | ||
Developed technology | |||
Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 29,402 | 18,586 | |
Accumulated Amortization | (16,562) | (13,244) | |
Total | $ 12,840 | $ 5,342 | |
Developed technology | Minimum | |||
Intangible Assets [Line Items] | |||
Useful Life | 3 years | ||
Developed technology | Maximum | |||
Intangible Assets [Line Items] | |||
Useful Life | 5 years |
Goodwill and Intangible asset_4
Goodwill and Intangible assets - Estimated Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets | ||
2024 | $ 5,210 | |
2025 | 2,375 | |
2026 | 2,176 | |
2027 | 1,814 | |
2028 | 1,755 | |
Thereafter | 4,366 | |
Total | $ 17,696 | $ 10,339 |
Strategic Investments (Details)
Strategic Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | 46 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | |
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | $ 296,563 | $ 83,520 | |
Investments | 16,192 | 74,606 | $ 145,953 |
Fair value adjustments, Realized gains | 12,312 | ||
Fair value adjustments, Unrealized gains | 72,915 | 103,890 | |
Fair value adjustments, Unrealized losses and impairments | (82,525) | (1,108) | (84,009) |
Fair value adjustments, Exercises | 1,500 | 66,630 | 68,130 |
Fair value, Sales | (14,546) | ||
Balance, end of period | 231,730 | 296,563 | 231,730 |
Strategic investments | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 277,676 | 80,775 | |
Investments | 15,016 | 56,914 | 124,498 |
Fair value adjustments, Realized gains | 12,312 | ||
Fair value adjustments, Unrealized gains | 44,376 | 74,817 | |
Fair value adjustments, Unrealized losses and impairments | (81,196) | (1,108) | (82,304) |
Fair value adjustments, Exercises | 1,500 | 96,719 | 98,219 |
Fair value, Sales | (14,546) | ||
Balance, end of period | 212,996 | 277,676 | 212,996 |
Unrealized impairment loss | 73,800 | ||
Warrants | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 1,654 | 2,745 | |
Investments | 1,176 | 459 | 4,222 |
Fair value adjustments, Unrealized gains | 28,539 | 29,073 | |
Fair value adjustments, Unrealized losses and impairments | (1,329) | (1,705) | |
Fair value adjustments, Exercises | (30,089) | (30,089) | |
Balance, end of period | 1,501 | 1,654 | 1,501 |
Call options | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 17,233 | ||
Investments | 17,233 | 17,233 | |
Balance, end of period | $ 17,233 | $ 17,233 | $ 17,233 |
Other Long-Term Assets (Details
Other Long-Term Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Other Long-Term Assets. | ||
Deferred commissions | $ 119,401 | $ 93,213 |
Deferred cost of goods sold | 43,678 | 11,475 |
Operating lease assets | $ 36,155 | $ 38,370 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total other long-term assets | Total other long-term assets |
Cash surrender value of corporate-owned life insurance policies | $ 7,558 | $ 4,274 |
Deferred implementation costs | 2,175 | 3,045 |
Prepaid expenses, deposits and other | 11,671 | 9,239 |
Total other long-term assets | $ 220,638 | $ 159,616 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Accrued Liabilities | ||||
Accrued salaries, commissions, benefits and bonus | $ 125,636 | $ 97,882 | ||
Accrued professional, consulting and lobbying fees | 7,377 | 3,861 | ||
Accrued warranty expense | 7,374 | 811 | $ 2,822 | $ 769 |
Accrued income and other taxes | 5,784 | 13,559 | ||
Accrued inventory in transit | 12,197 | 10,548 | ||
Other accrued expenses | 29,862 | 29,273 | ||
Accrued liabilities | $ 188,230 | $ 155,934 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Oct. 14, 2023 | |
Senior Convertible Notes | ||||
Net proceeds from issuance of notes | $ 673,769 | |||
Share price | $ 220.88 | |||
2027 Notes | ||||
Senior Convertible Notes | ||||
Aggregate principal amount | $ 690,000 | $ 690,000 | $ 690,000 | |
Interest rate (as a percent) | 0.50% | 0.50% | 0.50% | |
Issuance costs | $ 16,200 | $ 16,200 | ||
Net proceeds from issuance of notes | $ 673,800 | |||
Effective interest rate | 0.99% | 0.99% | ||
Repurchase price (as percentage) | 100% | |||
2027 Notes | Maximum | ||||
Senior Convertible Notes | ||||
Additional principal amount purchase option | $ 90,000 | $ 90,000 |
Convertible Senior Notes - Net
Convertible Senior Notes - Net carrying amount (Details) - 2027 Notes - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Senior Convertible Notes | ||
Principal | $ 690,000 | $ 690,000 |
Unamortized debt issuance costs | (12,887) | (16,033) |
Convertible notes carrying amount, net | $ 677,113 | $ 673,967 |
Convertible Senior Notes - Esti
Convertible Senior Notes - Estimated Fair Value (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Senior Convertible Notes | ||
Denomination of notes used for determination of fair value | $ 1,000 | |
2027 Notes | ||
Senior Convertible Notes | ||
Denomination of notes used for determination of fair value | 1,000 | $ 1,000 |
Fair value of notes | $ 873,300,000 | $ 687,300,000 |
Convertible Senior Notes - Inte
Convertible Senior Notes - Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Senior Convertible Notes | ||
Amortization of debt issuance costs | $ 3,126 | $ 198 |
Convertible Note Hedge 2027 | ||
Senior Convertible Notes | ||
Contractual interest expense | 3,450 | 211 |
Amortization of debt issuance costs | 3,126 | 198 |
Total interest expense | $ 6,576 | $ 409 |
Convertible Senior Notes - Hedg
Convertible Senior Notes - Hedge (Details) - 2027 Note Hedge | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Senior Convertible Notes | ||
Purchase price | $ 194,994,000 | |
Shares purchased | 3,016,680 | 3,016,680 |
Convertible Senior Notes - Warr
Convertible Senior Notes - Warrants (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 D | Dec. 31, 2022 USD ($) $ / security shares | |
Senior Convertible Notes | ||
Proceeds | $ | $ 124,269 | |
2027 Warrant | ||
Senior Convertible Notes | ||
Shares | shares | 3,016,680 | |
Strike Price | $ / security | 338.86 | |
Warrants exercise trading day period | D | 60 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2023 USD ($) lawsuit | Oct. 14, 2023 $ / shares | |
Loss Contingencies [Line Items] | ||
Open purchase order | $ 429.5 | |
Other purchase obligation | $ 351.2 | |
Number of lawsuits against Company | lawsuit | 5 | |
Amount self-insured for any product claim | $ 5 | |
Share price | $ / shares | $ 220.88 | |
Data Storage | ||
Loss Contingencies [Line Items] | ||
Purchase commitment period | 6 years | |
Purchase obligation | $ 425 | |
Storage fees | 62.4 | |
Remaining purchase commitment | 338.8 | |
Surety Bond | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding amount | 7.5 | |
Bonds outstanding | $ 10.5 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Contingency [Line Items] | ||
Liability for unrecognized tax benefits | $ 25.8 | |
Increase (decrease) in valuation allowance | (4.8) | $ 10.2 |
Unrecognized tax benefits, accrued interest | $ 0.6 | $ 0.3 |
Effective income tax rate reconciliation, percent 2018 through 2025 | 10.50% | |
Effective income tax rate Reconciliation, percent after 2025 | 13.125% | |
Maximum | ||
Income Tax Contingency [Line Items] | ||
Foreign Tax Returns, Income Tax Examination, Period | 10 years | |
United Kingdom | ||
Income Tax Contingency [Line Items] | ||
Deferred tax assets, foreign NOLs | $ 4.8 | |
State | ||
Income Tax Contingency [Line Items] | ||
Deferred tax assets, state NOLs | 17.5 | |
State research and development credit carry forwards | $ 29 |
Income Taxes - Income by Region
Income Taxes - Income by Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | |||
United States | $ 132,448 | $ 191,631 | $ (146,995) |
Foreign | 22,552 | 4,887 | 5,620 |
Income (loss) before provision (benefit) for income taxes | $ 155,000 | $ 196,518 | $ (141,375) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of the Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | |||
Federal | $ 33,084 | $ 10,804 | $ (331) |
State | 10,371 | 10,118 | 85 |
Foreign | 2,804 | 2,892 | (60) |
Total current | 46,259 | 23,814 | (306) |
Deferred: | |||
Federal | (61,106) | 26,238 | (65,557) |
State | (9,244) | (2,002) | (15,266) |
Foreign | 89 | (2,146) | 478 |
Total deferred | (70,261) | 22,090 | (80,345) |
Tax impact of unrecorded tax benefits liability | 4,775 | 3,475 | (706) |
Provision for income taxes (Income tax benefit) | $ (19,227) | $ 49,379 | $ (81,357) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the Company's Effective Income Tax Rate to the Federal Statutory Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | |||
Federal income tax at the statutory rate | $ 32,550 | $ 41,283 | $ (29,691) |
Excess stock-based compensation benefit | (106,522) | (4,616) | (205,483) |
Executive compensation limitation | 77,350 | 5,784 | 180,509 |
R&D credits | (26,204) | (13,340) | (34,376) |
Change in valuation allowance | (4,695) | 10,216 | 8,961 |
Change in liability for unrecognized tax benefits | 4,351 | 3,215 | 10,188 |
State income taxes, net of federal benefit | 3,658 | 7,928 | (12,717) |
Tax effects of intercompany transactions | (2,033) | (417) | 96 |
Foreign tax credit | (1,922) | ||
Global intangible low-taxed income | 1,890 | 653 | 1,250 |
Other permanent differences | 1,201 | 1,118 | 592 |
Difference between statutory and foreign tax rates | 1,013 | (428) | (155) |
Foreign derived intangible income deduction | (961) | (2,597) | |
Return to provision adjustment | 346 | (757) | 204 |
Other | 751 | 1,337 | (735) |
Provision for income taxes (Income tax benefit) | $ (19,227) | $ 49,379 | $ (81,357) |
Effective tax rate (as a percentage) | (12.40%) | 25.10% | 57.50% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred income tax assets: | ||
R&D capitalization, net | $ 99,746 | $ 46,122 |
Deferred revenue | 60,206 | 47,586 |
Convertible debt, net | 39,649 | 48,378 |
R&D tax credit carryforward | 16,554 | 12,826 |
Reserves, accruals, and other | 12,264 | 9,080 |
Accrued bonus | 11,253 | 8,652 |
Stock based compensation | 10,544 | 15,374 |
Lease liability | 9,664 | 9,973 |
Strategic investments | 6,109 | |
Amortization | 4,425 | 2,820 |
Deferred compensation | 2,803 | 1,575 |
Net operating loss carryforward | 2,115 | 4,874 |
Inventory reserve | 1,986 | 1,279 |
Total deferred income tax assets | 277,318 | 208,539 |
Deferred income tax liabilities: | ||
Depreciation | (14,575) | (10,272) |
Right of use asset | (8,404) | (8,748) |
Prepaid expenses | (2,223) | (1,119) |
Customer contract asset | (690) | (552) |
Goodwill amortization | (313) | |
Strategic investments | (4,615) | |
Total deferred income tax liabilities | (26,205) | (25,306) |
Net deferred income tax assets before valuation allowance | 251,113 | 183,233 |
Valuation allowance | (21,600) | (26,368) |
Net deferred income tax assets | $ 229,513 | $ 156,865 |
Income Taxes - Roll Forward of
Income Taxes - Roll Forward of Liability for Unrecognized Tax Benefits Exclusive of Accrued Interest (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of Unrecognized Tax Benefits | |||
Balance, beginning of period | $ 21,492 | $ 18,249 | $ 7,657 |
Decrease in previous years tax positions | (215) | ||
Increase in previous year tax positions | 232 | 22 | |
Increase in current year tax positions | 6,963 | 3,343 | 11,416 |
Decrease due to lapse of statutes of limitations | (2,486) | (332) | (846) |
Balance, end of period | $ 25,754 | $ 21,492 | $ 18,249 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated leverage ratio | 0.10 | |
Debt instrument covenant consolidated interest coverage ratio | 45.61 | |
Senior Unsecured Multi Currency Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total availability under line of credit agreement | $ 200 | |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Total availability under line of credit agreement | 30 | |
Accordion feature allowing for increase in borrowing capacity | 300 | |
Letters of credit outstanding amount | $ 7.5 | |
Available borrowing under letter of credit | 192.5 | |
Line of credit borrowings | $ 0 | $ 0 |
Line of Credit | 2027 Notes | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity, Prior to Stated Maturity of Convertible Senior Notes | 6 months | |
Minimum | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate (as a percentage) | 1.25% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated leverage ratio | 3.50 | |
Debt instrument covenant consolidated interest coverage ratio | 3.50 | |
Maximum | Line of Credit | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate (as a percentage) | 1.75% |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Preferred Stock (Details) | 12 Months Ended | |
Dec. 31, 2023 item $ / shares shares | Dec. 31, 2022 $ / shares shares | |
Stockholders' Equity | ||
Number of classes of stock | item | 2 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | shares | 200,000,000 | 200,000,000 |
Preferred stock, shares authorized (in shares) | shares | 25,000,000 | 25,000,000 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation Plans (Details) - shares shares in Millions | 1 Months Ended | 12 Months Ended |
May 31, 2022 | Dec. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for grant (in shares) | 1.7 | |
Service Based Restricted Stock Unit | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period | 10 years | |
Service Based Restricted Stock Unit | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Service Based Restricted Stock Unit | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 5 years | |
Performance Based Restricted Stock Unit | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expiration period | 10 years | |
Performance Based Restricted Stock Unit | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Performance Based Restricted Stock Unit | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 10 years | |
2022 Stock Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Additional shares authorized (in shares) | 2.5 |
Stockholders' Equity - CEO Perf
Stockholders' Equity - CEO Performance Award - Additional Information (Details) $ in Millions | 12 Months Ended | 67 Months Ended | |||
May 24, 2018 shares | Dec. 31, 2023 USD ($) item shares | Dec. 31, 2022 shares | Dec. 31, 2021 shares | Dec. 31, 2023 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Recorded share-based compensation expense | $ 246 | ||||
Number of options, Granted (in shares) | shares | 0 | 0 | 0 | ||
Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options, Granted (in shares) | shares | 6,365,856 | ||||
CEO Performance Award | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized stock-based compensation expense | $ 0 | 0 | |||
Chief Executive Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of market capitalization and operational goals | item | 12 | ||||
Number of operational goals | item | 12 | ||||
Chief Executive Officer | Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of operational goals | item | 12 | ||||
Number of options vested | shares | 6,400,000 | ||||
Recorded share-based compensation expense | $ 246 | ||||
Unrecognized stock-based compensation expense | $ 0 | $ 0 |
Stockholders' Equity - 2024 CEO
Stockholders' Equity - 2024 CEO Performance Award and 2024 eXponential Stock Plan (Details) | 12 Months Ended | |||
Dec. 18, 2023 shares | Oct. 14, 2023 D tranche $ / shares | Dec. 31, 2023 | Dec. 20, 2023 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average price per share | D | 90 | |||
Share price | $ / shares | $ 220.88 | |||
Performance Based Restricted Stock Unit | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period | 10 years | |||
Exponential Stock Plan 2024 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share of Common stock | 4,516,370 | |||
Exponential Stock Plan 2024 | Performance Based Restricted Stock Unit | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period | 7 years | |||
Number of award tranches | tranche | 7 | |||
Exponential Stock Plan 2024 | CEO Performance Award | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awards granted | 679,102 |
Stockholders' Equity - eXponent
Stockholders' Equity - eXponential Stock Performance Plan (Details) shares in Millions, $ in Millions | 12 Months Ended | 59 Months Ended | 67 Months Ended | ||
Oct. 14, 2023 | Feb. 12, 2019 USD ($) item | Dec. 31, 2023 USD ($) shares | Dec. 31, 2023 USD ($) shares | Dec. 31, 2023 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Recorded share-based compensation expense | $ 246 | ||||
Shares available for grant (in shares) | shares | 1.7 | 1.7 | 1.7 | ||
eXponential Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized stock-based compensation expense | $ 0 | $ 0 | $ 0 | ||
eXponential Stock Units | 2019 eXponential Stock Performance Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expiration period | 9 years | ||||
Market capitalization goal for such tranche | $ 2,500 | ||||
Market capitalization goal increment | $ 1,000 | ||||
Number of performance goals, revenue | item | 8 | ||||
Recorded share-based compensation expense | 199.9 | 199.9 | |||
Unrecognized stock-based compensation expense | 0 | 0 | 0 | ||
CEO Performance Award | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized stock-based compensation expense | 0 | 0 | 0 | ||
Performance Shares | Chief Executive Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Recorded share-based compensation expense | 246 | ||||
Unrecognized stock-based compensation expense | $ 0 | $ 0 | $ 0 | ||
Performance Based Restricted Stock Unit | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expiration period | 10 years | ||||
Performance Based Restricted Stock Unit | Exponential Stock Plan 2024 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expiration period | 7 years |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Restricted Stock Unit and Performance Stock Units Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
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) | 1,565 | 1,115 | 1,107 |
Number of Units, Granted (in shares) | 915 | 1,142 | 686 |
Number of Units, Released (in shares) | (740) | (541) | (554) |
Number of Units, Forfeited (in shares) | (125) | (151) | (124) |
Number of Units outstanding, end of period (in shares) | 1,615 | 1,565 | 1,115 |
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) | $ 145.48 | $ 133.40 | $ 76.10 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | 227.62 | 143.03 | 165.67 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | 140.81 | 117.49 | 66.23 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | 157.95 | 138.99 | 100.64 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ 193.09 | $ 145.48 | $ 133.40 |
Aggregate intrinsic value at year end | $ 417,240 | ||
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) | 1,369 | 1,499 | 5,618 |
Number of Units, Granted (in shares) | 319 | 158 | 309 |
Number of Units, Released (in shares) | (1,238) | (78) | (4,345) |
Number of Units, Forfeited (in shares) | (56) | (210) | (83) |
Number of Units outstanding, end of period (in shares) | 394 | 1,369 | 1,499 |
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) | $ 43.43 | $ 39.86 | $ 35.71 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | 218.04 | 106.57 | 77.53 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | 37.98 | 107.58 | 37.16 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | 48.40 | 41.62 | 40.91 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ 201.61 | $ 43.43 | $ 39.86 |
Aggregate intrinsic value at year end | $ 101,751 |
Stockholders' Equity - RSU and
Stockholders' Equity - RSU and PSU - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | 67 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2023 | Dec. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Tax payments, for net share settlement of share based award | $ 107,894 | $ 4,870 | $ 331,309 | ||
Recorded share-based compensation expense | $ 246,000 | ||||
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) | $ 258.33 | $ 258.33 | $ 258.33 | ||
Aggregate intrinsic value, RSUs vested | $ 161,700 | $ 84,900 | $ 96,400 | ||
Shares withheld, for net share settlement of share based award (in shares) | 26,000 | ||||
Tax payments, for net share settlement of share based award | $ 5,400 | ||||
Performance criteria had been met (in shares) | 740,000 | 541,000 | 554,000 | ||
Unrecognized stock-based compensation expense related to non-vested stock options | $ 273,500 | $ 273,500 | |||
Weighted average period over which costs are recognized | 2 years 3 months 14 days | ||||
eXponential Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized stock-based compensation expense related to non-vested stock options | $ 0 | $ 0 | |||
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) | $ 258.33 | $ 258.33 | |||
Shares withheld, for net share settlement of share based award (in shares) | 500,000 | ||||
Tax payments, for net share settlement of share based award | $ 102,500 | ||||
Performance criteria had been met (in shares) | 1,238,000 | 78,000 | 4,345,000 | ||
Unrecognized stock-based compensation expense related to non-vested stock options | $ 57,800 | $ 57,800 | |||
Weighted average period over which costs are recognized | 2 years 8 months 23 days |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of the Company's Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Number of options, Granted (in shares) | 0 | 0 | 0 |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Number of options, Options outstanding, beginning of year (in shares) | 2,438,000 | 2,438,000 | 6,366,000 |
Number of options, Granted (in shares) | 0 | 0 | 0 |
Number of options, Exercised (in shares) | (1,907,000) | 0 | (3,928,000) |
Number of options, Expired / terminated (in shares) | 0 | 0 | 0 |
Number of options, Options outstanding, end of year (in shares) | 531,000 | 2,438,000 | 2,438,000 |
Number of options, Options exercisable, end of period (in shares) | 531,000 | 1,377,000 | 1,377,000 |
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) | $ 28.58 | $ 28.58 | $ 28.58 |
Weighted average exercise price, Granted (in dollars per share) | 0 | 0 | |
Weighted average exercise price, Exercised (in dollars per share) | 28.58 | 28.58 | |
Weighted average exercise price, Expired / terminated (in dollars per share) | 0 | 0 | |
Weighted average exercise price, Options outstanding, end of period (in dollars per share) | 28.58 | 28.58 | 28.58 |
Weighted average exercise price, Options exercisable, end of period (in dollars per share) | $ 28.58 | $ 28.58 | $ 28.58 |
Aggregate intrinsic value, Options exercisable, end of period | $ 122 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Activity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||
May 24, 2018 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 30, 2022 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance shares authorized (in shares) | 0 | 0 | 0 | |||
Tax payments, for net share settlement of share based award | $ 107,894 | $ 4,870 | $ 331,309 | |||
Employee Stock Option [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance shares authorized (in shares) | 0 | 0 | 0 | |||
Total intrinsic value of options exercised | $ 323,000 | $ 571,400 | ||||
Aggregate intrinsic value, Options exercisable, end of period | $ 122,000 | |||||
Number of options, Options outstanding, end of year (in shares) | 531,000 | 2,438,000 | 2,438,000 | |||
Weighted average exercise price (in dollars per share) | $ 28.58 | $ 28.58 | $ 28.58 | $ 28.58 | ||
Number of options exercised (in shares) | 1,907,000 | 0 | 3,928,000 | |||
Performance Shares | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance shares authorized (in shares) | 6,365,856 | |||||
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) | $ 258.33 | $ 258.33 | ||||
Shares withheld, for net share settlement of share based award (in shares) | 26,000 | |||||
Tax payments, for net share settlement of share based award | $ 5,400 |
Stockholders' Equity - Summar_3
Stockholders' Equity - Summary of Stock Options Outstanding and Exercisable (Details) - Employee Stock Option [Member] - $ / shares shares in Thousands | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options outstanding (in shares) | 531 | 2,438 | 2,438 | 6,366 |
Weighted average exercise price (in dollars per share) | $ 28.58 | $ 28.58 | $ 28.58 | $ 28.58 |
Number of options, Options exercisable, end of period (in shares) | 531 | 1,377 | 1,377 | |
Weighted average exercise price, Options exercisable, end of period (in dollars per share) | $ 28.58 | $ 28.58 | $ 28.58 | |
$28.58 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Range of Exercise Price (in dollars per share) | $ 28.58 | |||
Number of options outstanding (in shares) | 531 | |||
Weighted average exercise price (in dollars per share) | $ 28.58 | |||
Weighted average remaining contractual life, Options outstanding, end of period | 4 years 1 month 28 days | |||
Number of options, Options exercisable, end of period (in shares) | 531 | |||
Weighted average exercise price, Options exercisable, end of period (in dollars per share) | $ 28.58 | |||
Weighted average remaining contractual life, Options exercisable, end of period | 4 years 1 month 28 days |
Stockholders' Equity - Stock-_2
Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | $ 131,358 | $ 106,176 | $ 303,331 |
Income tax benefit | 13,509 | 25,154 | 30,586 |
Cost of product sales and service sales | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | 6,595 | 4,607 | 5,844 |
Sales, general and administrative expenses | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | 58,533 | 51,301 | 238,813 |
Research and development expenses | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | $ 66,230 | $ 50,268 | $ 58,674 |
Stockholders' Equity - At-the-M
Stockholders' Equity - At-the-Market equity offering - Additional Information (Details) - ATM Equity Offering - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock sold (in shares) | 467,594 | 0 | 577,956 |
Gross proceeds | $ 96.4 | $ 107.6 | |
Net proceeds | 94.7 | 105.4 | |
Commissions | $ 1.7 | 1.6 | |
Stock issuance costs | $ 0.5 | ||
Maximum number of common stock shares to be sold | 3,000,000 | ||
Number of shares remaining to be sold | 2,000,000 |
Stockholders' Equity - Stock In
Stockholders' Equity - Stock Incentive Plan and Stock Inducement Plan (Details) - shares | Dec. 31, 2023 | Sep. 30, 2022 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for grant (in shares) | 1,700,000 | |
2022 Inducement Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock reserved for issuance (in shares) | 250,000 | |
Shares available for grant (in shares) | 100,000 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Plan (Details) - 2016 Stock Incentive Plan - USD ($) $ in Millions | Dec. 31, 2023 | Dec. 31, 2022 | Feb. 29, 2016 |
Equity, Class of Treasury Stock [Line Items] | |||
Outstanding common stock repurchase program authorized amount (up to) | $ 50 | ||
Remaining authorized repurchase amount | $ 16.3 | $ 16.3 |
Stockholders' Equity - Subseque
Stockholders' Equity - Subsequent Event (Details) - Restricted Stock Units (RSUs) - Subsequent Events shares in Millions | Jan. 02, 2024 installment shares |
Equity, Class of Treasury Stock [Line Items] | |
Number of shares granted to employees | shares | 0.4 |
Number of annual vesting installments | installment | 5 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated other comprehensive income (loss): | |||
Beginning balance | $ 1,268,491 | $ 1,047,849 | $ 976,255 |
Other comprehensive (loss) income | (3,500) | (5,862) | (1,458) |
Ending balance | 1,612,034 | 1,268,491 | 1,047,849 |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated other comprehensive income (loss): | |||
Beginning balance | (7,179) | (1,317) | 141 |
Other comprehensive (loss) income | (3,500) | (5,862) | (1,458) |
Ending balance | (10,679) | (7,179) | (1,317) |
Unrealized Gains (Losses) on Available-for-Sale Investments | |||
Accumulated other comprehensive income (loss): | |||
Beginning balance | (1,251) | (207) | |
Other comprehensive (loss) income | 852 | (1,044) | (207) |
Ending balance | (399) | (1,251) | (207) |
Foreign Currency Translation | |||
Accumulated other comprehensive income (loss): | |||
Beginning balance | (5,928) | (1,110) | 141 |
Other comprehensive (loss) income | (4,352) | (4,818) | (1,251) |
Ending balance | $ (10,280) | $ (5,928) | $ (1,110) |
Leases - Narrative (Details)
Leases - Narrative (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Termination period | 1 year |
Finance leases | $ 0 |
Future minimum lease payments | 53,252,000 |
Additional Lease | |
Lessee, Lease, Description [Line Items] | |
Future minimum lease payments | $ 20,800,000 |
Lease term | 12 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining terms | 10 years |
Leases - Balance Sheet (Details
Leases - Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
ASSETS | ||
Operating lease assets, other assets | $ 36,155 | $ 38,370 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent |
Current | ||
Operating lease, current liabilities | $ 7,938 | $ 6,357 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Noncurrent | ||
Operating lease, noncurrent liabilities | $ 33,550 | $ 37,143 |
Total lease liabilities | $ 41,488 | $ 43,500 |
Leases - Lease Expense (Details
Leases - Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease expense | $ 10,025 | $ 8,703 | $ 7,495 |
Sales, general and administrative expenses | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease expense | 6,659 | 4,388 | 3,820 |
Research and development expenses | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease expense | $ 3,366 | $ 4,315 | $ 3,675 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow and Balance Sheet Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 8,846 | $ 9,216 |
Right-of-use assets obtained in exchange for lease liabilities: | ||
Operating leases | $ 5,927 | $ 21,815 |
Weighted average remaining lease term: | ||
Operating leases (in years) | 7 years 1 month 6 days | 7 years 2 months 12 days |
Weighted average discount rate: | ||
Operating leases (as a percentage) | 6.05% | 5.44% |
Leases - Minimum Lease Payments
Leases - Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Operating | |
2024 | $ 10,234 |
2025 | 9,864 |
2026 | 6,218 |
2027 | 3,915 |
2028 | 3,855 |
Thereafter | 19,166 |
Total minimum lease payments | 53,252 |
Less: Amount representing interest | (11,764) |
Present value of lease payments | $ 41,488 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Employee Benefit Plans | |||
Defined contribution plan, cost | $ 14.5 | $ 10.9 | $ 7.4 |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments of company | segment | 2 | ||
Net sales | $ 1,563,391 | $ 1,189,935 | $ 863,381 |
Cost of sales | 608,009 | 461,297 | 322,471 |
Gross margin | 955,382 | 728,638 | 540,910 |
Research and development | 303,719 | 233,810 | 194,026 |
TASER | |||
Segment Reporting Information [Line Items] | |||
Net sales | 612,605 | 531,566 | 436,927 |
Cost of sales | 241,977 | 194,957 | 149,884 |
Gross margin | 370,628 | 336,609 | 287,043 |
Research and development | 62,393 | 51,607 | 46,136 |
Software and Sensors | |||
Segment Reporting Information [Line Items] | |||
Net sales | 950,786 | 658,369 | 426,454 |
Cost of sales | 366,032 | 266,340 | 172,587 |
Gross margin | 584,754 | 392,029 | 253,867 |
Research and development | 241,326 | 182,203 | 147,890 |
Product | |||
Segment Reporting Information [Line Items] | |||
Net sales | 967,711 | 801,388 | 608,525 |
Cost of sales | 450,718 | 363,219 | 260,098 |
Product | TASER | |||
Segment Reporting Information [Line Items] | |||
Net sales | 577,610 | 511,010 | 426,916 |
Cost of sales | 238,364 | 194,957 | 149,739 |
Product | Software and Sensors | |||
Segment Reporting Information [Line Items] | |||
Net sales | 390,101 | 290,378 | 181,609 |
Cost of sales | 212,354 | 168,262 | 110,359 |
Service | |||
Segment Reporting Information [Line Items] | |||
Net sales | 595,680 | 388,547 | 254,856 |
Cost of sales | 157,291 | 98,078 | 62,373 |
Service | TASER | |||
Segment Reporting Information [Line Items] | |||
Net sales | 34,995 | 20,556 | 10,011 |
Cost of sales | 3,613 | 145 | |
Service | Software and Sensors | |||
Segment Reporting Information [Line Items] | |||
Net sales | 560,685 | 367,991 | 244,845 |
Cost of sales | $ 153,678 | $ 98,078 | $ 62,228 |
Business Acquisition (Details)
Business Acquisition (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition | ||
Goodwill | $ 57,945 | $ 44,983 |
Business Acquisitions | ||
Business Acquisition | ||
Total Consideration | 23,900 | |
Contingent consideration, Amount | 2,200 | |
Transaction costs | 2,300 | |
Goodwill | 12,900 | |
Identifiable intangible assets | 11,500 | |
Net tangible assets | 2,200 | |
Deferred tax liability | $ 2,800 |
Subsequent Event (Details)
Subsequent Event (Details) - Fusus Inc - USD ($) $ in Millions | 1 Months Ended | |
Jan. 31, 2024 | Dec. 31, 2023 | |
Subsequent Event [Line Items] | ||
Transaction costs | $ 2.6 | |
Subsequent Events | ||
Subsequent Event [Line Items] | ||
Purchase price | $ 240 | |
Ownership interest | 20% |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ 174,227 | $ 147,139 | $ (60,018) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Exercise of Stock Options Arrangement | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | true |
Non-Rule 10b5-1 Arrangement Adopted | true |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Trading Arrangement Other than Exercise of Stock Options | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Modified | false |
Non-Rule 10b5-1 Arrangement Modified | false |