Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 24, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
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 | ||
Entity Shell Company | false | ||
Entity Public Float | $ 6.3 | ||
Entity Common Stock, Shares Outstanding | 72,862,227 | ||
Documents Incorporated by Reference | Parts of the registrant’s definitive proxy statement for its 2023 annual meeting of stockholders to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, 2022 are incorporated by reference into Part III of this Form | ||
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 | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 353,684 | $ 356,332 |
Marketable securities | 39,240 | 72,180 |
Short-term investments | 581,769 | 14,510 |
Accounts and notes receivable, net of allowance of $2,176 and $2,203 as of December 31, 2022 and December 31, 2021, respectively | 358,190 | 320,819 |
Contract assets, net | 196,902 | 180,421 |
Inventory | 202,471 | 108,688 |
Prepaid expenses and other current assets | 73,022 | 56,540 |
Total current assets | 1,805,278 | 1,109,490 |
Property and equipment, net | 169,843 | 138,457 |
Deferred tax assets, net | 156,866 | 127,193 |
Intangible assets, net | 12,158 | 15,470 |
Goodwill | 44,983 | 43,592 |
Long-term investments | 156,207 | 31,232 |
Long-term notes receivable, net | 5,210 | 11,256 |
Long-term contract assets, net | 45,170 | 29,753 |
Strategic investments | 296,563 | 83,520 |
Other long-term assets | 159,616 | 98,247 |
Total assets | 2,851,894 | 1,688,210 |
Current liabilities: | ||
Accounts payable | 59,918 | 32,220 |
Accrued liabilities | 155,934 | 103,707 |
Current portion of deferred revenue | 360,037 | 265,591 |
Customer deposits | 20,399 | 10,463 |
Other current liabilities | 6,358 | 6,540 |
Total current liabilities | 602,646 | 418,521 |
Deferred revenue, net of current portion | 248,003 | 185,721 |
Liability for unrecognized tax benefits | 10,745 | 3,797 |
Long-term deferred compensation | 6,285 | 5,679 |
Deferred tax liability, net | 1 | 811 |
Long-term lease liabilities | 37,143 | 20,440 |
Convertible notes, net | 673,967 | |
Other long-term liabilities | 4,613 | 5,392 |
Total liabilities | 1,583,403 | 640,361 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | ||
Common stock, $0.00001 par value; 200,000,000 shares authorized; 71,474,581 and 70,896,856 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 1 | 1 |
Additional paid-in capital | 1,174,594 | 1,095,229 |
Treasury stock at cost, 20,220,227 shares as of December 31, 2022 and December 31, 2021 | (155,947) | (155,947) |
Retained earnings | 257,022 | 109,883 |
Accumulated other comprehensive loss | (7,179) | (1,317) |
Total stockholders' equity | 1,268,491 | 1,047,849 |
Total liabilities and stockholders' equity | $ 2,851,894 | $ 1,688,210 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance on accounts receivable | $ 2,176 | $ 2,203 |
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) | 71,474,581 | 70,896,856 |
Common stock, shares outstanding (in shares) | 71,474,581 | 70,896,856 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net sales | $ 1,189,935 | $ 863,381 | $ 681,003 |
Cost of sales | 461,297 | 322,471 | 264,672 |
Gross margin | 728,638 | 540,910 | 416,331 |
Operating expenses: | |||
Sales, general and administrative | 401,575 | 515,007 | 307,286 |
Research and development | 233,810 | 194,026 | 123,195 |
Total operating expenses | 635,385 | 709,033 | 430,481 |
Income (loss) from operations | 93,253 | (168,123) | (14,150) |
Interest and other income, net | 103,265 | 26,748 | 7,859 |
Income (loss) before provision (benefit) for income taxes | 196,518 | (141,375) | (6,291) |
Provision (benefit) for income taxes | 49,379 | (81,357) | (4,567) |
Net income (loss) | $ 147,139 | $ (60,018) | $ (1,724) |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ 2.07 | $ (0.91) | $ (0.03) |
Diluted (in dollars per share) | $ 2.03 | $ (0.91) | $ (0.03) |
Weighted average shares outstanding: | |||
Basic (in shares) | 71,093 | 66,191 | 61,782 |
Diluted (in shares) | 72,534 | 66,191 | 61,782 |
Net income (loss) | $ 147,139 | $ (60,018) | $ (1,724) |
Foreign currency translation adjustments | (4,818) | (1,251) | 1,237 |
Unrealized losses on available-for-sale investments | (1,044) | (207) | |
Comprehensive income (loss) | 141,277 | (61,476) | (487) |
Product | |||
Net sales | 801,388 | 608,525 | 500,250 |
Cost of sales | 363,219 | 260,098 | 224,131 |
Service | |||
Net sales | 388,547 | 254,856 | 180,753 |
Cost of sales | $ 98,078 | $ 62,373 | $ 40,541 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Cumulative Effect Period Of Adoption Adjusted Balance Retained Earnings | Cumulative Effect Period Of Adoption Adjusted Balance | Common stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance at Dec. 31, 2019 | $ (640) | $ (640) | $ 1 | $ 528,272 | $ (155,947) | $ 172,265 | $ (1,096) | $ 543,495 |
Beginning balance (in shares) at Dec. 31, 2019 | 59,497,759 | 20,220,227 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock | 306,779 | 306,779 | ||||||
Issuance of common stock (in shares) | 3,450,000 | |||||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes | (7,514) | (7,514) | ||||||
Issuance of common stock under employee plans, net of shares withheld for payroll taxes (in shares) | 748,183 | |||||||
Stock-based compensation | 133,572 | 133,572 | ||||||
Issuance of common stock for business combination contingent consideration | 1,050 | 1,050 | ||||||
Issuance of common stock for business combination contingent consideration (in shares) | 70,613 | |||||||
Net income (loss) | (1,724) | (1,724) | ||||||
Other comprehensive income (loss), net | 1,237 | 1,237 | ||||||
Ending balance at Dec. 31, 2020 | $ 1 | 962,159 | $ (155,947) | 169,901 | 141 | 976,255 | ||
Ending 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 income (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 income (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 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 147,139 | $ (60,018) | $ (1,724) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 24,381 | 18,694 | 12,475 |
Amortization of issuance cost | 198 | ||
Coupon interest expense | 211 | ||
Purchase accounting adjustments to goodwill | 58 | ||
Loss on disposal and abandonment of intangible assets | 110 | 146 | 320 |
Loss on disposal and impairment of property, equipment, and other assets, net | 5,452 | 92 | 1,722 |
Realized and unrealized gains on strategic investments and marketable securities, net | (98,943) | (23,035) | |
Stock-based compensation | 106,176 | 303,331 | 133,572 |
Deferred income taxes | 22,090 | (81,303) | (16,528) |
Unrecognized tax benefits | 3,475 | (706) | 671 |
Bond amortization | (1,463) | 5,217 | 3,345 |
Noncash lease expense | 6,725 | 5,573 | 4,104 |
Provision for expected credit losses | 699 | (214) | 1,302 |
Change in assets and liabilities: | |||
Accounts and notes receivable and contract assets | (73,228) | (205,769) | (107,762) |
Inventory | (95,987) | (18,272) | (52,156) |
Prepaid expenses and other assets | (52,207) | (40,158) | (14,885) |
Accounts payable, accrued and other liabilities | 80,757 | 45,301 | 8,886 |
Deferred revenue | 159,718 | 175,615 | 65,139 |
Net cash provided by operating activities | 235,361 | 124,494 | 38,481 |
Cash flows from investing activities: | |||
Purchases of investments | (764,374) | (362,479) | (656,522) |
Proceeds from call / maturity of investments | 72,138 | 718,617 | 379,839 |
Exercise of warrants of strategic investments | (6,555) | ||
Proceeds from sale of strategic investments | 14,546 | ||
Purchases of property and equipment | (55,802) | (49,886) | (72,629) |
Proceeds from disposal of property and equipment | 287 | 43 | 95 |
Purchases of intangible assets | (307) | (392) | (241) |
Strategic investments | (74,250) | (45,500) | (7,068) |
Business acquisition, net of cash acquired | (2,104) | (22,393) | |
Net cash provided by (used in) investing activities | (830,967) | 252,556 | (356,526) |
Cash flows from financing activities: | |||
Net proceeds from equity offering | (74) | 105,514 | 306,779 |
Proceeds from options exercised | 51,614 | 295 | |
Income and payroll tax payments for net-settled stock awards | (4,870) | (331,309) | (7,809) |
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 | 598,100 | (174,181) | 299,265 |
Effect of exchange rate changes on cash and cash equivalents | (3,380) | (1,982) | 1,976 |
Net increase (decrease) in cash and cash equivalents | (886) | 200,887 | (16,804) |
Cash and cash equivalents and restricted cash, beginning of period | 356,438 | 155,551 | 172,355 |
Cash and cash equivalents and restricted cash, end of period | $ 355,552 | $ 356,438 | $ 155,551 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
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 (“U.S. 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, certificates of deposit, commercial paper, corporate bonds, term deposits, U.S. Government bonds, municipal 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 sheet 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, 2022 and 2021. Restricted Cash Restricted cash balances of $1.9 million and $0.1 million as of December 31, 2022 and 2021, 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, 2022, a pproximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder in other long-term assets. Inventory Inventories are stated at the lower of cost, determined on the first-in, first-out (“FIFO”) basis, or net realizable value, net of an inventory valuation allowance. We use a standard cost methodology to approximate the cost basis for our inventories. Costs include allocations for materials, labor, and overhead. All variances between actual costs and standard costs are apportioned to inventory and cost of product sales based upon inventory turnover. 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 useful lives of the assets. Land is not depreciated. 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. We have determined that technological feasibility is reached shortly before the release of those products and as a result, the development costs incurred after the establishment of technological feasibility and before the release of those products are not material. 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 circumstances could include, but are not limited to, a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. 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 perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. 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. During the year ended December 31, 2020, we abandoned certain planning and site development activities related to our planned new headquarters, resulting in an impairment charge of $0.7 million, as well as recognized impairment charges totaling $0.5 million related to improvements and remodeling of certain of our offices. During the year ended December 31, 2022, these charges were included in sales, general and administrative expense, except for $2.7 million related to the Seattle office lease cease-use, which was recorded in research and development (“R&D”), in the accompanying consolidated statements of operations. 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 accompanying 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") (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, cameras and related accessories such as cartridges, batteries and docks, 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 have 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 have 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 twelve 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 twelve 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, notes receivable, and contract assets is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. 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 and contract assets are presented net of a reserve for expected credit losses, which totaled $3.6 million and $3.3 million as of December 31, 2022 and 2021, 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 $2.3 million, $2.6 million and $1.3 million in the years ended December 31, 2022, 2021 and 2020, respectively. Advertising costs are included in sales, general and administrative expenses in the accompanying statements of operations. Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated warranty reserve were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Balance, beginning of period $ 2,822 $ 769 $ 1,476 Utilization of reserve (2,209) (873) (700) Warranty expense 198 2,926 (7) Balance, end of period $ 811 $ 2,822 $ 769 Research and Development Expenses We expense as incurred R&D costs that do not meet the qualifications to be capitalized. We incurred R&D expense of $233.8 million, $194.0 million and $123.2 million in 2022, 2021 and 2020, 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 14 for additional information regarding the change in unrecognized tax benefits. The Tax Cuts and Jobs Act of 2017 contains a provision which 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 which 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. 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 three depository institutions. As of December 31, 2022, the aggregate balances in such accounts were $139.9 million. Our balances with these three institutions regularly exceed Federal Deposit Insurance Corporation insured limits for domestic deposits and various deposit insurance programs covering our deposits in Australia, Canada, Finland, France, Germany, Hong Kong, India, Italy, the Netherlands, Spain, the United Kingdom, and Vietnam. To manage the related credit exposure, management continually monitors the creditworthiness of the financial institutions where we have deposits. No customer represented more than 10% of total net sales for the years ended December 31, 2022, 2021 or 2020. At December 31, 2022, and 2021, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the U.S., Canada, China, Malaysia, 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 the injection molded component tooling, most of the 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, 2022 were comprised of money market funds, certificates of deposit, commercial paper, corporate bonds, term deposits, U.S. Government bonds, municipal bonds, agency bonds, U.S. Treasury bills, and U.S. Treasury inflation-protected securities. Cash equivalents and investments at December 31, 2021 were comprised of money market funds, corporate bonds, municipal bonds, and U.S. Government agency bonds. We have investments in marketable securities, for which 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. We have strategic investments in various unconsolidated affiliates as of December 31, 2022. The estimated fair value of the investments was determined based on Level 3 inputs. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at December 31, 2022 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 sheet. Segment and Geographic Information Our operations are comprised of two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the "Software and Sensors" segment); and the manufacture and sale of conducted electrical devices ("CEDs"), batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as "Axon Cloud revenue." Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker ("CODM"). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 20. 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, 2022, 2021 and 2020, no individual country outside the U.S. represented more than 10% of net sales. Substantially all of our assets are located in the U.S. 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. 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 2019 Stock Incentive Plan (the “2019 Plan”), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our eXponential Stock Performance Plan (“XSPP”) and grants of eXponential Stock Units (“XSUs”) under the plan. The XSUs are grants of restricted stock units, each with a term of approximately nine years Stock-based compensation expense associated with 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 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 XSUs because the awards specify a post-vest holding period of 2.5 years for the acquired shares that vest. Certain of the 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 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, e |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 Year Ended December 31, 2021 Software and Software and TASER Sensors Total TASER Sensors Total TASER 7 $ 224,905 $ — $ 224,905 $ 135,906 $ — $ 135,906 TASER X26P 33,725 — 33,725 40,629 — 40,629 TASER X2 24,068 — 24,068 58,081 — 58,081 TASER Consumer devices 6,420 — 6,420 7,132 — 7,132 Cartridges 181,686 — 181,686 152,842 — 152,842 Axon Body — 124,164 124,164 — 75,484 75,484 Axon Flex — 3,031 3,031 — 4,155 4,155 Axon Fleet — 63,017 63,017 — 24,319 24,319 Axon Dock — 30,086 30,086 — 24,441 24,441 Axon Evidence and cloud services 18,752 371,889 390,641 9,159 246,005 255,164 Extended warranties 29,008 49,765 78,773 24,125 33,686 57,811 Other 13,002 16,417 29,419 9,053 18,364 27,417 Total $ 531,566 $ 658,369 $ 1,189,935 $ 436,927 $ 426,454 $ 863,381 Year Ended December 31, 2020 Software and TASER Sensors Total TASER 7 $ 107,506 $ — $ 107,506 TASER X26P 41,724 — 41,724 TASER X2 60,107 — 60,107 TASER Consumer devices 9,407 — 9,407 Cartridges 115,193 — 115,193 Axon Body — 57,150 57,150 Axon Flex — 4,082 4,082 Axon Fleet — 20,108 20,108 Axon Dock — 19,723 19,723 Axon Evidence and cloud services 2,935 176,797 179,732 Extended warranties 20,754 24,408 45,162 Other 8,926 12,183 21,109 Total $ 366,552 $ 314,451 $ 681,003 The following table presents our revenues disaggregated by geography (in thousands): Year Ended December 31, 2022 2021 2020 United States $ 987,975 83 % $ 686,914 80 % $ 535,079 79 % Other Countries 201,960 17 176,467 20 145,924 21 Total $ 1,189,935 100 % $ 863,381 100 % $ 681,003 100 % 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 twelve months was $8.9 million as of December 31, 2022, and was 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 comprised 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, 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, 2022 (in thousands): Year Ended December 31, 2022 2021 2020 Contract assets, net $ 242,072 $ 210,174 $ 84,044 Contract liabilities (deferred revenue) 608,040 451,312 275,181 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 261,271 177,812 135,513 During the year ended December 31, 2022, our contract assets balance increased by $31.9 million or 15.2% due to increased sales under subscription plans. Contract liabilities increased $156.7 million or 34.7% for the year ended December 31, 2022 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, 2022 December 31, 2021 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 14,207 $ 17,618 $ 31,825 $ 21,257 $ 4,766 $ 26,023 Software and Sensors 26,229 15,338 41,567 23,175 18,137 41,312 40,436 32,956 73,392 44,432 22,903 67,335 Hardware: TASER 49,361 12,640 62,001 12,944 28,727 41,671 Software and Sensors 50,426 109,227 159,653 34,862 81,223 116,085 99,787 121,867 221,654 47,806 109,950 157,756 Services: TASER 7,637 9,501 17,138 2,701 3,482 6,183 Software and Sensors 212,177 83,679 295,856 170,652 49,386 220,038 219,814 93,180 312,994 173,353 52,868 226,221 Total $ 360,037 $ 248,003 $ 608,040 $ 265,591 $ 185,721 $ 451,312 December 31, 2022 December 31, 2021 Current Long-Term Total Current Long-Term Total TASER $ 71,205 $ 39,759 $ 110,964 $ 36,902 $ 36,975 $ 73,877 Software and Sensors 288,832 208,244 497,076 228,689 148,746 377,435 Total $ 360,037 $ 248,003 $ 608,040 $ 265,591 $ 185,721 $ 451,312 Remaining Performance Obligations As of December 31, 2022, we had approximately $4.6 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, 2022. We expect to recognize between approximately 15% - 25% of this balance over the next twelve 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 sales, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive income. As of December 31, 2022, our assets for costs to obtain contracts were as follows (in thousands): December 31, 2022 December 31, 2021 Current deferred commissions (1) $ 29,405 $ 19,962 Deferred commissions, net of current portion (2) 93,213 54,028 $ 122,618 $ 73,990 (1) Current deferred commissions are included within prepaid expenses and other current assets on the accompanying consolidated balance sheet. (2) Deferred commissions, net of current portion, are included in other assets on the accompanying consolidated balance sheet. During the years ended December 31, 2022, 2021 and 2020, we recognized $24.2 million, $16.6 million, and $11.3 million, respectively, of amortization related to deferred commissions. These costs are recorded within sales, general and administrative expenses on the accompanying 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 which 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 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, 2022, 2021, and 2020, we recorded interest income of $0.6 million, $1.0 million, and $1.5 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, 2022 | |
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, 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. During the year ended December 31, 2021, we acquired 9,000,000 shares of common stock of Cellebrite DI Ltd (“CLBT”) with a fair value of $90.0 million. The CLBT common stock is recorded as marketable securities in the accompanying 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, 2022, we recorded a $32.9 million unrealized loss on marketable securities from our investment in CLBT. The following table summarizes our cash, cash equivalents, and available-for-sale investments at December 31, 2021 (in thousands): As of December 31, 2021 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 353,488 $ — $ — $ 353,488 $ 353,488 $ — $ — $ — Level 1: Money market funds 2,844 — — 2,844 2,844 — — — Agency bonds 10,700 4 — 10,704 — — 10,704 — Marketable securities 90,000 — (17,820) 72,180 — 72,180 — — Subtotal 103,544 4 (17,820) 85,728 2,844 72,180 10,704 — Level 2: State and municipal obligations 2,570 — (5) 2,565 — — 1,400 1,165 Corporate bonds 32,748 1 (276) 32,473 — — 2,406 30,067 Subtotal 35,318 1 (281) 35,038 — — 3,806 31,232 Total $ 492,350 $ 5 $ (18,101) $ 474,254 $ 356,332 $ 72,180 $ 14,510 $ 31,232 During the year ended December 31, 2021, we sold held-to-maturity securities with a net carrying amount of $165.4 million prior to their maturity. |
Expected Credit Losses
Expected Credit Losses | 12 Months Ended |
Dec. 31, 2022 | |
Expected Credit Losses | |
Expected Credit Losses | Note 4 - Expected Credit Losses We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable, notes receivable, and contract assets is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Our monitoring activities include account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. The following table provides a roll-forward of the allowance for expected credit losses that is deducted from the amortized cost basis of accounts receivable, notes receivable, and contract assets to present the net amount expected to be collected (in thousands): Year Ended December 31, 2022 Year Ended December 31, 2021 United States Other countries Total United States Other countries Total Balance, beginning of period $ 3,171 $ 178 $ 3,349 $ 2,902 $ 474 $ 3,376 Provision for (recovery of) expected credit losses 309 391 700 245 (291) (46) Amounts written off charged against the allowance (416) — (416) (54) — (54) Other, including foreign currency translation — (3) (3) 78 (5) 73 Balance, end of period $ 3,064 $ 566 $ 3,630 $ 3,171 $ 178 $ 3,349 As of December 31, 2022 and December 31, 2021, the allowance for expected credit losses for each type of customer receivable was as follows (in thousands): December 31, December 31, 2022 2021 Accounts receivable and notes receivable, current $ 2,176 $ 2,203 Contract assets, net 1,360 1,010 Long-term notes receivable, net of current portion 94 136 Total allowance for expected credit losses on customer receivables $ 3,630 $ 3,349 |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2022 | |
Inventory | |
Inventory | Note 5 - Inventory Inventory consisted of the following at December 31, 2022 and December 31, 2021 (in thousands): December 31, 2022 December 31, 2021 Raw materials $ 72,740 $ 38,267 Finished goods 129,731 70,421 Total inventory $ 202,471 $ 108,688 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Property and Equipment | Note 6 - Property and Equipment Property and equipment consisted of the following at December 31 (in thousands): Estimated Useful Life December 31, 2022 December 31, 2021 Land N/A $ 51,612 $ 54,868 Building and leasehold improvements 3- 39 25,874 25,712 Production equipment 3- 5 57,170 54,090 Computers, equipment and software 3-5 years 25,154 15,343 Furniture and office equipment 3- 5 7,420 6,838 Vehicles 5 years 4,027 2,932 Capitalized internal software development costs 3 5 14,198 12,200 Construction-in-process N/A 62,283 25,258 Total cost 247,738 197,241 Less: Accumulated depreciation (77,895) (58,784) Property and equipment, net $ 169,843 $ 138,457 Construction-in-process included $28.3 million and $12.4 million related to the development of our new campus at December 31, 2022 and December 31, 2021, respectively. Depreciation and amortization expense related to property and equipment was $20.4 million, $15.8 million and $9.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, of which $8.5 million, $6.3 million and $4.0 million was included in cost of sales for the respective years. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 were as follows (in thousands): Software and TASER Sensors Total Balance, beginning of period $ 1,396 $ 42,196 $ 43,592 Goodwill acquired 1,674 — 1,674 Purchase accounting adjustments — (58) (58) Foreign currency translation adjustments (113) (112) (225) Balance, end of period $ 2,957 $ 42,026 $ 44,983 Intangible assets (other than goodwill) consisted of the following (in thousands): December 31, 2022 December 31, 2021 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 $ (1,823) $ 1,220 $ 3,043 $ (1,518) $ 1,525 Issued patents 5 ‑ 25 years 2,981 (1,507) 1,474 3,061 (1,457) 1,604 Issued trademarks 3 ‑ 15 years 1,119 (713) 406 1,130 (643) 487 Customer relationships 4 ‑ 8 years 4,892 (2,995) 1,897 4,985 (2,439) 2,546 Non-compete agreements 3 ‑ 4 years 447 (447) — 454 (444) 10 Developed technology 3 ‑ 5 years 18,586 (13,244) 5,342 18,060 (10,465) 7,595 Total amortizable 31,068 (20,729) 10,339 30,733 (16,966) 13,767 Non-amortizable (indefinite-lived) intangible assets: TASER trademark 900 — 900 900 — 900 My90 trademark 168 — 168 168 — 168 Patents and trademarks pending 751 — 751 635 — 635 Total non-amortizable 1,819 — 1,819 1,703 — 1,703 Total intangible assets $ 32,887 $ (20,729) $ 12,158 $ 32,436 $ (16,966) $ 15,470 Amortization expense of intangible assets was $4.0 million, $2.9 million and $3.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Estimated amortization for intangible assets with definitive lives for the next five years ended December 31, and thereafter, is as follows (in thousands): 2023 $ 3,786 2024 3,722 2025 887 2026 688 2027 354 Thereafter 902 Total $ 10,339 |
Strategic Investments
Strategic Investments | 12 Months Ended |
Dec. 31, 2022 | |
Strategic Investments | |
Strategic Investments | Note 8 – Strategic Investments Strategic investments include investments in a number of non-public technology-driven companies. The investments are measured at cost less impairment, adjusted for observable price changes and are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In conjunction with certain of our strategic investments, we have the ability to commit additional capital over time through warrants and call options; for some investments, the exercisability and exercise prices are conditional on the achievement of certain performance metrics. The following tables provide a roll-forward of the balance of strategic investments (in thousands): Year Ended December 31, 2022 Year Ended December 31, 2021 Strategic investments Warrants Call options Total Strategic investments Warrants Total Balance, beginning of period $ 80,775 $ 2,745 $ — $ 83,520 $ 9,500 $ 2,211 $ 11,711 Investments 56,914 459 17,233 74,606 45,500 — 45,500 Observable price changes: Realized gains — — — — 12,312 — 12,312 Unrealized gains 44,376 28,539 — 72,915 28,009 534 28,543 Unrealized losses (1,108) — — (1,108) — — — Exercises 96,719 (30,089) — 66,630 — — — Sales — — — — (14,546) — (14,546) Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 $ 83,520 Inception to date Strategic investments Warrants Call options Total Investments $ 109,482 $ 3,047 $ 17,233 $ 129,762 Observable price changes: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses (1,108) (377) — (1,485) Exercises 96,719 (30,089) — 66,630 Sales (14,546) — — (14,546) Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 As part of our strategy, we continuously evaluate opportunities for strategic investments that align with our mission. During the year ended December 31, 2022 our investment areas included real-time crime center software, drones and related software, biometric sensors, and weapon detection solutions. In the year ended December 31, 2022, we exercised warrants in one of our strategic investees for a total exercise price of $6.6 million, resulting in an unrealized gain of $60.1 million that was recognized in earnings for the year ended December 31, 2022. The estimated fair value of the investments were calculated using valuation techniques that included both observable and unobservable inputs. This estimated fair value reflects a value that was lower than the issue per share of the new equity issued by the strategic investees because of different characteristics of the newly issued equity instruments compared to our existing investments. The valuation techniques included both Level 2 and Level 3 inputs as defined by ASC Topic 820. |
Variable Interest Entities
Variable Interest Entities | 12 Months Ended |
Dec. 31, 2022 | |
Variable Interest Entities | |
Variable Interest Entities | Note 9 – Variable Interest Entities We evaluate our investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If we conclude that an investee is a VIE, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a VIE, we consolidate such entity and reflect the non-controlling interest of other beneficiaries of that entity. We determine whether we are the primary beneficiary of a VIE by performing an analysis that principally considers: ● The VIE’s purpose, design, and risks the VIE was designed to create and pass through to its variable interest holders; ● The VIE’s capital structure; ● The terms between the VIE and its variable interest holders and other parties involved with the VIE; and ● Related-party affiliations. The table below presents a summary of the nonconsolidated VIEs in which we hold variable interests: December 31, 2022 December 31, 2021 Total nonconsolidated variable interest entities: Carrying value of variable interest - assets $ 11,530 $ 895 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 11,530 895 Total $ 11,530 $ 895 (1) In the table above: ● The nature of our variable interest is described in the row under maximum exposure to loss. ● Our exposure to the obligations of the VIE is limited to our interest in the entity. The primary purpose of our U.S-based, nonconsolidated VIE investments is to create strategic partnerships within market-leading providers of law enforcement technology solutions. We present all variable interests in unconsolidated VIEs as strategic investments within the long-term assets section of the condensed consolidated balance sheet. We have provided financial support to the nonconsolidated VIEs in exchange for preferred equity as well as other financial instruments that give us the ability to commit additional capital overtime. Financial support provided to the nonconsolidated VIEs is used to continue to finance their operations. We have no explicit or implicit arrangements to provide additional financial support to the VIEs and we have no liabilities to the VIEs as of December 31, 2022 and December 31, 2021. |
Other Long-Term Assets
Other Long-Term Assets | 12 Months Ended |
Dec. 31, 2022 | |
Other Long-Term Assets. | |
Other Long-Term Assets | Note 10 - Other Long-Term Assets Other long-term assets consisted of the following at December 31 (in thousands): December 31, 2022 December 31, 2021 Cash surrender value of corporate-owned life insurance policies $ 4,274 $ 5,276 Deferred commissions (1) 93,213 54,028 Restricted cash 54 57 Operating lease assets 38,370 23,270 Deferred implementation costs (2) 3,045 3,915 Prepaid expenses, deposits and other 20,660 11,701 Total other long-term assets $ 159,616 $ 98,247 (1) Represents the incremental costs of obtaining contracts with customers, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contracts and amortized consistent with the recognition timing of the revenue for the underlying performance obligations. See Note 2 “Costs to Obtain a Contract”. (2) During the year ended December 31, 2021, we completed an implementation of several software-as-a-service applications supporting our internal operations. Following the implementation, we placed $4.3 million of deferred implementation costs assets related to these applications into service. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities | |
Accrued Liabilities | Note 11 - Accrued Liabilities Accrued liabilities consisted of the following at December 31 (in thousands): December 31, 2022 December 31, 2021 Accrued salaries, benefits and bonus $ 97,882 $ 62,425 Accrued professional, consulting and lobbying fees 3,861 7,152 Accrued warranty expense 811 2,822 Accrued income and other taxes 13,559 3,736 Accrued inventory in transit 10,548 9,945 Other accrued expenses 29,273 17,627 Accrued liabilities $ 155,934 $ 103,707 |
Convertible Senior Notes
Convertible Senior Notes | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 12 – Convertible Senior Notes 2027 Notes In December 2022, we issued $690.0 million aggregate principal amount of our 0.50% Convertible Senior Notes due 2027 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 0.500% 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 Notes are our senior unsecured obligations and rank senior in right of payment to any indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. December 31, 2022 Initial Conversion Maturity Initial Conversion Rate per Initial Number Date Price per Share $1,000 Par Value of Shares 2027 Notes December 15, 2027 $ 228.73 4.3720 shares 3,016,680 The Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders prior to the close of business on the business day immediately preceding September 15, 2027 only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on March 31, 2023 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five business day period after any ten consecutive trading day period (“the 2027 Measurement Period”) in which the trading price (as defined in the 2027 indenture governing the Notes) per $1,000 principal amount of the Notes for each trading day of the 2027 Measurement Period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate in effect on each such trading day; • if we call any or all of the Notes for redemption, but only with respect to the Notes called (or deemed called) for redemption , at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; • upon the occurrence of specified corporate events as set forth within the indenture governing the Notes. On or after September 15, 2027 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their notes, in integral multiples of $1,000 principal amount, at their option, regardless of the foregoing conditions. If we undergo a fundamental change (as defined in the indenture governing the Notes), subject to certain conditions, holders may require us to repurchase for cash all or any portion of their Notes, in principal amounts of $1,000 or a multiple thereof, 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, to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events or if we issue a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their notes in connection with such corporate event or during the relevant redemption period. We may not redeem the Notes prior to December 22, 2025. We may redeem for cash all or any portion of the Notes, at our option, on or after December 22, 2025 and prior to December 15, 2027, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. No sinking fund is provided for the Notes. December 31, 2022 December 31, 2021 Principal $ 690,000 $ — Unamortized debt issuance costs (16,033) — Convertible notes carrying amount, net $ 673,967 $ — The total fair value of the Notes was $687.3 million as of December 31, 2022. The fair value was 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, 2022 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. December 31, 2022 December 31, 2021 Contractual interest expense $ 211 $ — Amortization of debt issuance costs 198 — Total interest expense $ 409 $ — Note Hedge To reduce the impact of potential economic dilution upon conversion of the Notes, we entered into a convertible note hedge transaction (the “Note Hedge” or “2027 Note Hedge”) with certain investment banks, with respect to our common stock, concurrently with the issuance of the 2027 Notes. Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 The Note Hedge covers shares of our common stock at a strike price per share that corresponds to the initial conversion price of the respective Notes, subject to adjustment, and are exercisable upon conversion of the Notes. If exercised, we may elect to receive cash, shares of our common stock, or a combination of cash and shares. We have accounted for the aggregate amount of purchase price for the Note Hedge as a reduction to additional paid-in capital. The Note Hedge will expire upon the maturity of the Notes. The Note Hedge is intended to reduce the potential economic dilution upon conversion of the Notes in the event that the fair value per share of our common stock at the time of exercise is greater than the conversion price of the Notes. The Note Hedge is a separate transaction and is not part of the terms of the Notes. Holders of the Notes do not have any rights with respect to the Note Hedge. The Note Hedge does not impact earnings per share, as it was entered into to offset any dilution from the Notes. As of December 31, 2022, 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, 2022 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 13 - 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 $23.8 million for the year ended December 31, 2022. The remaining purchase commitment at December 31, 2022 was $401.2 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, 2022, we had approximately $499.7 million of open purchase orders and $415.4 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 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. U.S. Federal Trade Commission Litigation The U.S. Federal Trade Commission (“FTC”) filed an administrative enforcement action in January 2020 regarding our May 2018 acquisition of an insolvent body worn camera competitor, Vievu LLC. The FTC alleges the merger was anticompetitive and adversely affected the body worn camera and digital evidence management market for “large metropolitan police departments,” which we deny. The administrative hearing remains stayed pending our federal court constitutional challenges to the FTC’s structure and administrative processes. Even if we ultimately are required to divest Vievu and other assets, any such result will not interfere with our ability to meet contractual obligations or implement our solutions. Prior to the FTC’s enforcement action, we sued the FTC in federal court in the District of Arizona for declaratory and injunctive relief alleging the FTC’s structure and administrative processes violate Article II of the U.S. Constitution and our Fifth Amendment rights to due process and equal protection. The district court dismissed the action, without prejudice, for lack of jurisdiction. The Ninth Circuit affirmed in a split decision but granted our motion to stay the appellate mandate pending the filing of our petition for certiorari with the U.S. Supreme Court. On January 24, 2022, the Supreme Court granted our petition. Oral argument was held November 7, 2022. The FTC’s administrative case will remain stayed pending resolution of the Supreme Court proceedings. In parallel to these matters, we are evaluating strategic alternatives to litigation, which we might pursue if determined to be in the best interests of shareholders and customers. This could include a divestiture of the Vievu entity and/or related assets and the licensure of certain intellectual and other intangible property. While we continue to believe the acquisition of Vievu was lawful and a benefit to Vievu’s customers, the cost, risk and distraction of protracted litigation merit consideration of settlement if achievable on terms agreeable to the FTC and Axon. General From time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. It is our policy to not disclose the specifics of any claim or threatened lawsuit until the summons and complaint are actually served on us. After carefully assessing the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed reasonably possible but not probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim, if material for disclosure. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing, the availability of insurance, and the severity of any potential loss. We reevaluate and update accruals as matters progress over time. Based on our assessment of outstanding litigation and claims as of December 31, 2022, 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, 2022, we had outstanding letters of credit issued under our credit facility of $7.0 million that are expected to expire throughout 2023 and 2024. Additionally, we had $18.0 million of outstanding surety bonds at December 31, 2022, with $7.5 million expiring in 2023 and the remaining $10.5 million expiring in 2024. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | Note 14 - Income Taxes Income (loss) before provision (benefit) for income taxes included the following components for the years ended December 31 (in thousands): 2022 2021 2020 United States $ 191,631 $ (146,995) $ (11,529) Foreign 4,887 5,620 5,238 Total $ 196,518 $ (141,375) $ (6,291) Significant components of the provision (benefit) for income taxes were as follows for the years ended December 31 (in thousands): 2022 2021 2020 Current: Federal $ 10,804 $ (331) $ 5,277 State 10,118 85 3,886 Foreign 2,892 (60) 1,943 Total current 23,814 (306) 11,106 Deferred: Federal 26,238 (65,557) (10,175) State (2,002) (15,266) (3,111) Foreign (2,146) 478 (3,131) Total deferred 22,090 (80,345) (16,417) Tax impact of unrecorded tax benefits liability 3,475 (706) 744 Provision for income taxes (Income tax benefit) $ 49,379 $ (81,357) $ (4,567) A reconciliation of our effective income tax rate to the federal statutory rate follows for the years ended December 31 (in thousands): 2022 2021 2020 Federal income tax at the statutory rate $ 41,283 $ (29,691) $ (1,321) State income taxes, net of federal benefit 7,928 (12,717) 935 Difference between statutory and foreign tax rates (428) (155) (86) Other permanent differences (1) 1,771 1,842 794 Foreign derived intangible income deduction (2,597) — (902) Executive compensation limitation 5,784 180,509 15,463 R&D credits (13,340) (34,376) (10,246) Return to provision adjustment (757) 204 (1,078) Change in liability for unrecognized tax benefits 3,215 10,188 987 Excess stock-based compensation benefit (4,616) (205,483) (9,002) Change in valuation allowance 10,216 8,961 163 Tax effects of intercompany transactions (417) 96 (389) Other 1,337 (735) 115 Provision for income taxes (Income tax benefit) $ 49,379 $ (81,357) $ (4,567) Effective tax rate 25.1 % 57.5 % 72.6 % (1) Other permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, lobbying fees, and taxable income as a result of global intangible low-tax income ("GILTI"). Significant components of our deferred income tax assets and liabilities are as follows at December 31 (in thousands): 2022 2021 Deferred income tax assets: Net operating loss carryforward $ 4,874 $ 68,353 Deferred revenue 47,586 27,031 Deferred compensation 1,575 1,414 Lease liability 9,973 5,886 Inventory reserve 1,279 684 Stock based compensation 15,374 10,913 Amortization 2,820 2,672 R&D tax credit carryforward 12,826 29,249 Reserves, accruals, and other 17,732 14,717 R&D capitalization, net 46,122 — Convertible debt, net 48,378 — Total deferred income tax assets 208,539 160,919 Deferred income tax liabilities: Customer contract asset (552) (1,104) Right of use asset (8,748) (5,008) Depreciation (10,272) (8,938) Strategic investments (4,615) (2,653) Prepaid expenses (1,119) (594) Other — (72) Total deferred income tax liabilities (25,306) (18,369) Net deferred income tax assets before valuation allowance 183,233 142,550 Valuation allowance (26,368) (16,168) Net deferred income tax assets $ 156,865 $ 126,382 We have $89.5 million of state net operating losses (“NOLs”) which will expire at various dates between 2026 and 2041 or carry forward indefinitely. We have $4.4 million of federal R&D credits, which expire between 2034 and 2041, and $0.1 million of which is subject to limitation under IRC Section 382. We have $21.6 million of state R&D credits carrying forward, which expire at various dates between 2023 and 2037, or carry forward indefinitely. In the U.K., we have $4.1 million of NOLs which may be carried forward indefinitely. In preparing our condensed consolidated financial statements, management assesses the likelihood that its deferred tax assets will be realized from future taxable income. In evaluating our ability to recover our deferred income tax assets, management considers all available positive and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction by jurisdiction basis. A valuation allowance is established if it is determined that it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Management exercises significant judgment in determining our provision for income taxes, our deferred tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets. As of December 31, 2022, management continues to believe the positive evidence from projected future earnings outweighs the negative evidence and a valuation allowance is only needed on specific deferred tax assets. We have concluded that a valuation allowance is necessary against unrealized investment losses as well as transaction costs incurred in connection with certain investments. Additionally, we do have Arizona R&D tax credits expiring unutilized each year; therefore, management has concluded that it is more likely than not that our Arizona R&D deferred tax asset will not be realized, and a valuation allowance has been recorded against this net asset. In Australia, we have determined that sufficient deferred tax liabilities will reverse in order to realize all assets except one long-lived intangible asset where there is not an expectation that the asset may be realized. Therefore, we continue to have a partial valuation allowance for Australia. 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 $21.5 million as of December 31, 2022. Should the unrecognized benefit of $21.5 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): 2022 2021 2020 Balance, beginning of period $ 18,249 $ 7,657 $ 6,861 Increase (decrease) in previous year tax positions 232 22 (34) Increase in current year tax positions 3,343 11,416 950 Decrease due to lapse of statutes of limitations (332) (846) (120) Balance, end of period $ 21,492 $ 18,249 $ 7,657 Federal income tax returns for 2019 through 2021 remain open to examination by the U.S. Internal Revenue Service (the “IRS”), while state and local income tax returns for 2018 through 2021 also generally remain open to examination by state taxing authorities. The 2008 through 2017 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 2018 through 2021. The foreign tax returns for 2018 through 2021 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 accompanying consolidated statements of operations and comprehensive income (loss). As of December 31, 2022, and 2021, we had accrued interest of $0.3 million and $0.2 million, respectively. |
Line of Credit
Line of Credit | 12 Months Ended |
Dec. 31, 2022 | |
Line of Credit. | |
Line of Credit | Note 15 - Line of Credit In December 2022, we entered into a Credit Agreement that provides for a senior unsecured multi-currency revolving credit facility in an aggregate principal amount of up to $200.0 million, $30.0 million of which is available for the issuance of letters of credit. The credit agreement will mature on the earlier of December 15, 2027 or the date that is six months prior to the stated maturity date of the 0.50% convertible senior notes due 2027 unless such Notes have been redeemed, repurchased, converted or defeased in full. Additionally, the credit agreement has an accordion feature which allows for an increase in the total line of credit up to $300.0 million, subject to each lender’s sole discretion. As of December 31, 2022, there were no borrowings under the line. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit. As of December 31, 2022, we had letters of credit outstanding of approximately $7.0 million under the facility and available borrowing of $193.0 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at Term SOFR plus 1.25 to 1.75% per year determined in accordance with a pricing grid based on our net debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio. 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, 2022, our leverage ratio was 0.97 to 1.00. Additionally, we must comply with a consolidated interest coverage ratio, defined as EBITDA to consolidated interest expense, of no less than 3.50 to 1.00 based upon a trailing four fiscal quarter end. We are compliant with the consolidated interest coverage ratio, which is not meaningful for the year ended December 31, 2022. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | Note 16 - 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 and a contractual maturity of ten years. Performance-based grants generally have vesting periods ranging from 1 to 10 years and a contractual maturity of ten 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 2.7 million shares available for grant as of December 31, 2022. Performance-based stock awards We have issued performance-based stock options and performance-based RSUs, the vesting of which is generally contingent upon the achievement of certain performance criteria related to our operating performance, as well as successful and timely development and market acceptance of future product introductions. In addition, certain of the performance RSUs have additional service requirements subsequent to the achievement of the performance criteria. Compensation expense is recognized over the requisite service period, which is defined as the longest explicit, implicit or derived service period based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. For both service-based and performance-based RSUs, we account for forfeitures as they occur as a reduction to stock-based compensation expense and additional paid-in-capital For performance-based options with a vesting schedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized for each pair of performance and market conditions over the longer of the expected achievement period of the performance and market conditions, beginning at the point in time that the relevant performance condition is considered probable of achievement. The fair value of such awards is estimated on the grant date using Monte Carlo simulations. CEO Performance Award On May 24, 2018, our stockholders approved the Board of Directors’ grant of 6,365,856 stock option awards to Patrick W. Smith, our CEO (the “CEO Performance Award”). The CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational goals (performance conditions) and market capitalization goals (market conditions), assuming continued employment either as the CEO or as both Executive Chairman and Chief Product Officer and service through each attainment date. Each of the 12 vesting tranches of the CEO Performance Award have a 10-year contractual term and will vest upon certification by the Compensation Committee of the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of the following eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA have been met for the previous four consecutive fiscal quarters. Adjusted EBITDA for purposes of the CEO Performance Award ("Adjusted EBITDA (CEO Performance Award)") is defined as net income (loss) attributable to common stockholders before interest expense, interest and other income (such as dividends) earned on investments in marketable securities, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation expense. Revenue Goal (1) (in thousands) Achievement Status Adjusted EBITDA (in thousands) Achievement Status Goal #1, $710,058 Achieved Goal #1, $125,000 Achieved Goal #2, $860,058 Achieved Goal #2, $155,000 Achieved Goal #3, $1,010,058 Achieved Goal #3, $175,000 Achieved Goal #4, $1,210,058 Probable Goal #4, $190,000 Achieved Goal #5, $1,410,058 Not Applicable Goal #5, $200,000 Achieved Goal #6, $1,610,058 Not Applicable Goal #6, $210,000 Achieved Goal #7, $1,810,058 Not Applicable Goal #7, $220,000 Achieved Goal #8, $2,010,058 Not Applicable Goal #8, $230,000 Achieved (1) In connection with the business acquisition that was completed during the three months ended June 30, 2018, the revenue goals were adjusted for the acquiree’s Target Revenue, as defined in the CEO Performance Award agreement. Stock-based compensation expense associated with the CEO Performance Award is recognized over the longer of the expected achievement period for each pair of market capitalization and operational goals, beginning at the point in time when the relevant operational goal is considered probable of being met. The probability of meeting an operational goal and the expected achievement point in time for meeting a probable operational goal are based on a subjective assessment of our forward-looking financial projections, taking into consideration statistical analysis. Even though no tranches of the CEO Performance Award vest unless a market capitalization and a matching operational goal are both achieved, stock-based compensation expense is recognized when an operational goal is considered probable of achievement regardless of whether a market capitalization goal is actually achieved. Stock-based compensation represents a non-cash expense and is recorded in sales, general, and administrative operating expense on our consolidated statements of operations and comprehensive income. The first ten market capitalization goals have been achieved as of December 31, 2022. As of December 31, 2022, 5.3 million stock options have been certified by the Compensation Committee and vested. The eleventh market capitalization goal has not yet been attained, though the related operational goal has been achieved as of December 31, 2022. As twelve operational goals have been achieved or are considered probable of achievement, we recorded stock-based compensation expense of $243.9 million related to the CEO Performance Award from the grant date through December 31, 2022. The number of stock options that would vest related to the remaining unvested tranches is approximately 1.1 million shares. As of December 31, 2022, we had $2.1 million of total unrecognized stock-based compensation expense for the performance goals that were considered probable of achievement, which will be recognized over a weighted-average period of 0.2 years. eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the 2019 Stock Incentive Plan (the “2019 Plan”), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our eXponential Stock Performance Plan (“XSPP”) and grants of eXponential Stock Units (“XSUs”) under the plan. Initial awards under the plan were granted in January 2019, with additional employee awards granted since that date. During the year ended December 31, 2022 we granted an additional seventy-four thousand XSUs. The XSUs are grants of Restricted Stock Units (“RSUs”), each with a term of approximately nine years, that vest in 12 equal tranches. Each of the 12 tranches will vest upon certification by the Compensation Committee of the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA (CEO Performance Award) have been met for the previous four consecutive fiscal quarters. Beginning with the quarter ended June 30, 2021, new XSU grants are divided into a reduced number of tranches depending on employee eligibility and current market capitalization attainment. The XSPP contains an anti-dilution provision incorporated into the plan based on shareholder feedback, which affects the calculation of the market capitalization goals in the plan. The plan defines a maximum number of shares outstanding that may be used in the calculation of the market capitalization goals (the “XSU Maximum”). If the actual number of shares outstanding exceeds the XSU Maximum guardrail, then the lower pre-defined number of shares in the XSU Maximum, rather than the higher actual number of shares outstanding, is used to calculate market capitalization for the determination of the market capitalization goals in the XSPP, which, together with the operational goals, determines whether XSUs vest for participating employees. The XSU Maximum is defined as the actual number of shares outstanding on the original XSU grant date of January 2, 2019, increased by a 3% annual rate over the term of the XSPP and by shares issued upon the exercise of CEO Performance Award options. The XSU Maximum is also adjusted for acquisitions, spin-offs or other changes in the number of outstanding shares of common stock, if such changes have a corresponding adjustment on the market capitalization goals. New shares issued for any other reasons, including shares issued upon vesting of XSUs, RSUs, and Performance Stock Units (“PSUs”) as well as shares issued to raise capital through equity issuances or in other transactions, do not increase the XSU Maximum. The market capitalization and operational goals are identical to the CEO Performance Award, but a different number of shares is used to calculate the market capitalization goals if shares outstanding exceed the XSU Maximum. Additionally, because the grant date is different than that of the CEO Performance Award, the measurement period for market capitalization is not identical. The first nine market capitalization goals have been achieved as of December 31, 2022. The tenth and eleventh market capitalization goals have not yet been attained, though the related operational goals have been achieved as of December 31, 2022. The first XSU tranche vested in March 2021, the second and third tranches vested in May 2021, five tranches vested in September 2021, and one tranche vested in December 2021. As all twelve operational goals have been achieved or are considered probable of achievement, we recorded stock-based compensation expense of $186.2 million related to the XSU awards from their respective grant dates through December 31, 2022. The number of XSU awards that would vest related to the remaining three tranches is approximately 1.2 million shares. As of December 31, 2022, we had $14.7 million of total unrecognized stock-based compensation expense, which will be recognized over a weighted-average period of 1.2 years. Restricted Stock Units The following table summarizes RSU activity for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2022 2021 2020 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 1,115 $ 133.40 1,107 $ 76.10 1,249 $ 45.47 Granted 1,142 143.03 686 165.67 577 100.76 Released (541) 117.49 (554) 66.23 (598) 40.68 Forfeited (151) 138.99 (124) 100.64 (121) 52.40 Units outstanding, end of year 1,565 145.48 1,115 133.40 1,107 76.10 Aggregate intrinsic value at year end $ 259,729 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $165.93 per share on December 30, 2022, multiplied by the number of RSUs outstanding. The fair value as of the respective vesting dates of RSUs that vested during the year was $84.9 million, $96.4 million, and $56.0 million for the years ended December 31, 2022, 2021, and 2020, respectively. Certain RSUs that vested in the year ended December 31, 2022 were net-share settled, such that we withheld shares to cover the employees’ tax obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to RSUs during 2022 were eleven thousand and had a value of approximately $1.6 million on their respective vesting dates as determined by the closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the 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. As of December 31, 2022, we had $192.7 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 2.32 years. RSUs are released when vesting requirements are met. Performance Stock Units The following table summarizes PSU activity, inclusive of XSUs, for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2022 2021 2020 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 1,499 $ 39.86 5,618 $ 35.71 6,033 $ 34.47 Granted 158 106.57 309 77.53 417 58.11 Released (78) 107.58 (4,345) 37.16 (184) 27.79 Forfeited (210) 41.62 (83) 40.91 (648) 40.83 Units outstanding, end of year 1,369 43.43 1,499 39.86 5,618 35.71 Aggregate intrinsic value at year end $ 227,125 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $165.93 per share, multiplied by the number of PSUs outstanding. As of December 31, 2022, there was $19.2 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 1.17 years. PSUs are released when vesting requirements are met. As of December 31, 2022, the performance criteria had been met for approximately twenty thousand of the 1.4 million PSUs outstanding. Certain PSUs that vested in the year ended December 31, 2022 were net-share settled such that we withheld shares to cover the employees’ tax obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to PSUs were approximately twenty-six thousand and had a value of $3.3 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): 2022 2021 2020 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 6,366 $ 28.58 6,431 $ 28.34 Granted — — — — — — Exercised — — (3,928) 28.58 (65) 4.52 Expired / terminated — — — — — — Options outstanding, end of year 2,438 28.58 2,438 28.58 6,366 28.58 Options exercisable, end of year 1,377 28.58 1,377 28.58 530 28.58 We did not grant any stock options in 2022, 2021 or 2020. No options were exercised in the year ending December 31, 2022. The total intrinsic value of options exercised was $571.4 million and $5.1 million for the years ended December 31, 2021 and 2020, respectively. The intrinsic value for options exercised was calculated as the difference between the exercise price of the underlying stock option awards and the market price of our common stock on the date of exercise. The following table summarizes information about stock options that were fully vested or expected to vest as of December 31, 2022 (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 1,377 $ 28.58 5.16 1,377 $ 28.58 5.16 The aggregate intrinsic value of options exercisable at December 31, 2022 was $189.1 million, respectively. 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 $165.93 on December 30, 2022. At December 31, 2022, we had 1.1 million unvested options outstanding with a weighted average exercise price of $28.58 per share, weighted average grant-date fair value of $35.80 per share and weighted average remaining contractual life of 5.16 years. The aggregate intrinsic value of unvested options at December 31, 2022 was $145.7 million. 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): 2022 2021 2020 Cost of product and service sales $ 4,607 $ 5,844 $ 3,464 Sales, general and administrative expenses 51,301 238,813 103,860 Research and development expenses 50,268 58,674 26,248 Total stock-based compensation expense $ 106,176 $ 303,331 $ 133,572 Income tax benefit $ 25,154 $ 30,586 $ 29,329 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 Inducement Plan. In accordance with Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules, awards under the 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 our 2019 Stock Inducement Plan. There are approximately 0.1 million shares available for grant as of December 31, 2022. At-the-Market equity offering During the year ended December 31, 2021, we sold 577,956 shares of our common stock under our "at-the-market" equity offering program (the “ATM”). We 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. During the year ending December 31, 2022, no shares were sold under the ATM. We may sell up to a total of 3.0 million shares of our common stock under the ATM, of which approximately 2.4 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 incentive 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, 2022 and 2021, $16.3 million remained available under the plan for future purchases. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (loss) | 12 Months Ended |
Dec. 31, 2022 | |
Accumulated Other Comprehensive Income (loss). | |
Accumulated Other Comprehensive Income (loss) | Note 17 – 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, 2019 $ — $ (1,096) $ (1,096) Other comprehensive income — 1,237 1,237 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) |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | Note 18 - 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 convertible 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 1 to approximately 11 years, some of which include one or more options to renew for up to 5 years, and some of which include options to terminate the leases within 1 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, 2022. Leases (in thousands) Classification December 31, 2022 December 31, 2021 Assets Operating lease assets Other assets $ 38,370 $ 23,270 Liabilities Current Operating Other current liabilities $ 6,357 $ 6,540 Noncurrent Operating Other long-term liabilities 37,143 20,440 Total lease liabilities $ 43,500 $ 26,980 The components of operating lease expense were as follows for the years ended December 31 (in thousands): Classification 2022 2021 2020 Operating lease expense Sales, general and administrative expenses (1) $ 4,388 $ 3,820 $ 3,762 Research and development expense 4,315 3,675 2,995 Total operating lease expense (2) 8,703 7,495 6,757 Sublease income Other income — — (55) Net lease expense $ 8,703 $ 7,495 $ 6,702 (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, 2022 December 31, 2021 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 9,216 $ 7,506 Right-of-use assets obtained in exchange for lease liabilities: Operating leases 21,815 6,726 Weighted average remaining lease term: Operating leases 7.2 years 4.2 years Weighted average discount rate: Operating leases 5.44 % 2.73 % Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows (in thousands): Operating 2023 8,448 2024 8,936 2025 8,990 2026 5,374 2027 3,566 Thereafter 20,579 Total minimum lease payments 55,893 Less: Amount representing interest (12,393) Present value of lease payments $ 43,500 As of December 31, 2022, we do not have any leases that have not yet commenced that create significant rights and obligations for us. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 19 - 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, 2022, 2021 and 2020, were approximately $10.9 million, $7.4 million and $5.6 million, respectively. |
Segment Data
Segment Data | 12 Months Ended |
Dec. 31, 2022 | |
Segment Data | |
Segment Data | Note 20 - Segment Data Our operations are comprised of 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 sales, general, and administrative expense by segment. Information relative to our reportable segments was as follows (in thousands): 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 For the year ended December 31, 2020 Software and TASER Sensors Total Net sales from products $ 362,649 $ 137,601 $ 500,250 Net sales from services 3,903 176,850 180,753 Net sales 366,552 314,451 681,003 Cost of product sales 136,925 87,206 224,131 Cost of service sales — 40,541 40,541 Cost of sales 136,925 127,747 264,672 Gross margin $ 229,627 $ 186,704 $ 416,331 Research and development $ 15,380 $ 107,815 $ 123,195 |
Supplemental Disclosure to Cash
Supplemental Disclosure to Cash Flows | 12 Months Ended |
Dec. 31, 2022 | |
Supplemental Disclosure to Cash Flows | |
Supplemental Disclosure to Cash Flows | Note 21 - Supplemental Disclosure to Cash Flows Supplemental non-cash and other cash flow information were as follows as of and for the years ended December 31 (in thousands): 2022 2021 2020 Supplemental disclosures: Cash and cash equivalents $ 353,684 $ 356,332 $ 155,440 Restricted cash $ 1,868 $ 106 $ 111 Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 355,552 $ 356,438 $ 155,551 Cash paid for income taxes, net of refunds $ 10,508 $ 5,108 $ 10,893 Non-cash transactions: Property and equipment purchases in accounts payable $ 1,056 $ 1,994 878 Non-cash purchase consideration related to business combinations — 3,920 — |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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 (“U.S. 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, certificates of deposit, commercial paper, corporate bonds, term deposits, U.S. Government bonds, municipal 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 sheet 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, 2022 and 2021. |
Restricted Cash | Restricted Cash Restricted cash balances of $1.9 million and $0.1 million as of December 31, 2022 and 2021, 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, 2022, a pproximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder in other long-term assets. |
Inventory | Inventory Inventories are stated at the lower of cost, determined on the first-in, first-out (“FIFO”) basis, or net realizable value, net of an inventory valuation allowance. We use a standard cost methodology to approximate the cost basis for our inventories. Costs include allocations for materials, labor, and overhead. All variances between actual costs and standard costs are apportioned to inventory and cost of product sales based upon inventory turnover. 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 useful lives of the assets. Land is not depreciated. |
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. We have determined that technological feasibility is reached shortly before the release of those products and as a result, the development costs incurred after the establishment of technological feasibility and before the release of those products are not material. 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 circumstances could include, but are not limited to, a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. 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 perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. 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. During the year ended December 31, 2020, we abandoned certain planning and site development activities related to our planned new headquarters, resulting in an impairment charge of $0.7 million, as well as recognized impairment charges totaling $0.5 million related to improvements and remodeling of certain of our offices. During the year ended December 31, 2022, these charges were included in sales, general and administrative expense, except for $2.7 million related to the Seattle office lease cease-use, which was recorded in research and development (“R&D”), in the accompanying consolidated statements of operations. |
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 accompanying 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") (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, cameras and related accessories such as cartridges, batteries and docks, 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 have 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 have 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 twelve 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 twelve 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, notes receivable, and contract assets is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. 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 and contract assets are presented net of a reserve for expected credit losses, which totaled $3.6 million and $3.3 million as of December 31, 2022 and 2021, 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 $2.3 million, $2.6 million and $1.3 million in the years ended December 31, 2022, 2021 and 2020, respectively. Advertising costs are included in sales, general and administrative expenses in the accompanying statements of operations. |
Standard Warranties | Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated warranty reserve were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Balance, beginning of period $ 2,822 $ 769 $ 1,476 Utilization of reserve (2,209) (873) (700) Warranty expense 198 2,926 (7) Balance, end of period $ 811 $ 2,822 $ 769 |
Research and Development Expenses | Research and Development Expenses We expense as incurred R&D costs that do not meet the qualifications to be capitalized. We incurred R&D expense of $233.8 million, $194.0 million and $123.2 million in 2022, 2021 and 2020, 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 14 for additional information regarding the change in unrecognized tax benefits. The Tax Cuts and Jobs Act of 2017 contains a provision which 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 which 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. |
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 three depository institutions. As of December 31, 2022, the aggregate balances in such accounts were $139.9 million. Our balances with these three institutions regularly exceed Federal Deposit Insurance Corporation insured limits for domestic deposits and various deposit insurance programs covering our deposits in Australia, Canada, Finland, France, Germany, Hong Kong, India, Italy, the Netherlands, Spain, the United Kingdom, and Vietnam. To manage the related credit exposure, management continually monitors the creditworthiness of the financial institutions where we have deposits. No customer represented more than 10% of total net sales for the years ended December 31, 2022, 2021 or 2020. At December 31, 2022, and 2021, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the U.S., Canada, China, Malaysia, 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 the injection molded component tooling, most of the 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, 2022 were comprised of money market funds, certificates of deposit, commercial paper, corporate bonds, term deposits, U.S. Government bonds, municipal bonds, agency bonds, U.S. Treasury bills, and U.S. Treasury inflation-protected securities. Cash equivalents and investments at December 31, 2021 were comprised of money market funds, corporate bonds, municipal bonds, and U.S. Government agency bonds. We have investments in marketable securities, for which 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. We have strategic investments in various unconsolidated affiliates as of December 31, 2022. The estimated fair value of the investments was determined based on Level 3 inputs. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at December 31, 2022 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 sheet. |
Segment and Geographic Information | Segment and Geographic Information Our operations are comprised of two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the "Software and Sensors" segment); and the manufacture and sale of conducted electrical devices ("CEDs"), batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as "Axon Cloud revenue." Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker ("CODM"). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 20. 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, 2022, 2021 and 2020, no individual country outside the U.S. represented more than 10% of net sales. Substantially all of our assets are located in the U.S. |
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. 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 2019 Stock Incentive Plan (the “2019 Plan”), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our eXponential Stock Performance Plan (“XSPP”) and grants of eXponential Stock Units (“XSUs”) under the plan. The XSUs are grants of restricted stock units, each with a term of approximately nine years Stock-based compensation expense associated with 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 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 XSUs because the awards specify a post-vest holding period of 2.5 years for the acquired shares that vest. Certain of the 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 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 (the “CEO Grant Date”), our stockholders approved the Board of Directors’ grant of 6,365,856 stock option awards to Patrick W. Smith, our CEO (the “CEO Performance Award”). The CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational goals (performance conditions) and market capitalization goals (market conditions), assuming continued employment either as the CEO or as both Executive Chairman and Chief Product Officer and service through each vesting date. Stock-based compensation expense associated with the 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. No options were awarded during the years ended December 31, 2022, 2021, or 2020. |
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 restricted stock units. The effects of outstanding stock options, unvested restricted stock units, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire the number of shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): For the Year Ended December 31, 2022 2021 2020 Numerator for basic and diluted earnings per share: Net income (loss) $ 147,139 $ (60,018) $ (1,724) Denominator: Weighted average shares outstanding-basic 71,093 66,191 61,782 Dilutive effect of stock-based awards 1,441 — — Diluted weighted average shares outstanding 72,534 66,191 61,782 Net income (loss) per common share: Basic $ 2.07 $ (0.91) $ (0.03) Diluted $ 2.03 $ (0.91) $ (0.03) 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, 2022 2021 2020 Stock-based awards 3,264 7,690 12,150 2027 Notes 3,017 — — 2027 Warrants 3,017 — — Total potentially dilutive securities 9,298 7,690 12,150 |
Recently Issued Accounting Guidance | Recently Issued Accounting Guidance Recently Adopted Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Derivatives and Hedging (Topic 815), or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The guidance also requires the if-converted method to be applied for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. Effective January 1, 2022, we adopted ASU 2020-06. There was no impact upon adoption as we had no outstanding debt upon adoption. In November 2021, FASB issued ASU No. 2021-10, Government Assistance (Topic 832). The guidance improves the transparency of government assistance accounting as it requires business entities to disclose transactions that involve government assistance received if the transactions were accounted for by applying a grant or contribution accounting model by analogy. The ASU is effective for annual periods beginning after December 15, 2021. We adopted ASU 2021-10 on January 1, 2022 and will apply the disclosure requirement prospectively to all transactions within the scope of the amendments that are reflected in the financial statements at the date of the initial application along with new transactions that are entered into after the date of initial application. Adoption of this ASU did not have a material impact 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. |
Correction of an Immaterial Error | Correction of an Immaterial Error During the fourth quarter of 2022 we recorded out of period adjustments related to prior periods reflecting an $8.5 million increase to net sales and a $2.1 million increase to provision for income taxes. This increase to net sales relates primarily to Axon Cloud SaaS, software and professional services performance obligations which were fulfilled in prior periods, including $2.3 million which related to prior years. Based on our quantitative and qualitative analysis, we do not consider the out of period impact to be material to our financial position or results of operations for any prior periods or for the year ended December 31, 2022. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 2020 Balance, beginning of period $ 2,822 $ 769 $ 1,476 Utilization of reserve (2,209) (873) (700) Warranty expense 198 2,926 (7) Balance, end of period $ 811 $ 2,822 $ 769 |
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, 2022 2021 2020 Numerator for basic and diluted earnings per share: Net income (loss) $ 147,139 $ (60,018) $ (1,724) Denominator: Weighted average shares outstanding-basic 71,093 66,191 61,782 Dilutive effect of stock-based awards 1,441 — — Diluted weighted average shares outstanding 72,534 66,191 61,782 Net income (loss) per common share: Basic $ 2.07 $ (0.91) $ (0.03) Diluted $ 2.03 $ (0.91) $ (0.03) |
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, 2022 2021 2020 Stock-based awards 3,264 7,690 12,150 2027 Notes 3,017 — — 2027 Warrants 3,017 — — Total potentially dilutive securities 9,298 7,690 12,150 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 Year Ended December 31, 2021 Software and Software and TASER Sensors Total TASER Sensors Total TASER 7 $ 224,905 $ — $ 224,905 $ 135,906 $ — $ 135,906 TASER X26P 33,725 — 33,725 40,629 — 40,629 TASER X2 24,068 — 24,068 58,081 — 58,081 TASER Consumer devices 6,420 — 6,420 7,132 — 7,132 Cartridges 181,686 — 181,686 152,842 — 152,842 Axon Body — 124,164 124,164 — 75,484 75,484 Axon Flex — 3,031 3,031 — 4,155 4,155 Axon Fleet — 63,017 63,017 — 24,319 24,319 Axon Dock — 30,086 30,086 — 24,441 24,441 Axon Evidence and cloud services 18,752 371,889 390,641 9,159 246,005 255,164 Extended warranties 29,008 49,765 78,773 24,125 33,686 57,811 Other 13,002 16,417 29,419 9,053 18,364 27,417 Total $ 531,566 $ 658,369 $ 1,189,935 $ 436,927 $ 426,454 $ 863,381 Year Ended December 31, 2020 Software and TASER Sensors Total TASER 7 $ 107,506 $ — $ 107,506 TASER X26P 41,724 — 41,724 TASER X2 60,107 — 60,107 TASER Consumer devices 9,407 — 9,407 Cartridges 115,193 — 115,193 Axon Body — 57,150 57,150 Axon Flex — 4,082 4,082 Axon Fleet — 20,108 20,108 Axon Dock — 19,723 19,723 Axon Evidence and cloud services 2,935 176,797 179,732 Extended warranties 20,754 24,408 45,162 Other 8,926 12,183 21,109 Total $ 366,552 $ 314,451 $ 681,003 The following table presents our revenues disaggregated by geography (in thousands): Year Ended December 31, 2022 2021 2020 United States $ 987,975 83 % $ 686,914 80 % $ 535,079 79 % Other Countries 201,960 17 176,467 20 145,924 21 Total $ 1,189,935 100 % $ 863,381 100 % $ 681,003 100 % |
Contract with Customer, Assets and Liabilities | The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the year ended December 31, 2022 (in thousands): Year Ended December 31, 2022 2021 2020 Contract assets, net $ 242,072 $ 210,174 $ 84,044 Contract liabilities (deferred revenue) 608,040 451,312 275,181 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 261,271 177,812 135,513 During the year ended December 31, 2022, our contract assets balance increased by $31.9 million or 15.2% due to increased sales under subscription plans. Contract liabilities increased $156.7 million or 34.7% for the year ended December 31, 2022 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, 2022 December 31, 2021 Current Long-Term Total Current Long-Term Total Warranty: TASER $ 14,207 $ 17,618 $ 31,825 $ 21,257 $ 4,766 $ 26,023 Software and Sensors 26,229 15,338 41,567 23,175 18,137 41,312 40,436 32,956 73,392 44,432 22,903 67,335 Hardware: TASER 49,361 12,640 62,001 12,944 28,727 41,671 Software and Sensors 50,426 109,227 159,653 34,862 81,223 116,085 99,787 121,867 221,654 47,806 109,950 157,756 Services: TASER 7,637 9,501 17,138 2,701 3,482 6,183 Software and Sensors 212,177 83,679 295,856 170,652 49,386 220,038 219,814 93,180 312,994 173,353 52,868 226,221 Total $ 360,037 $ 248,003 $ 608,040 $ 265,591 $ 185,721 $ 451,312 December 31, 2022 December 31, 2021 Current Long-Term Total Current Long-Term Total TASER $ 71,205 $ 39,759 $ 110,964 $ 36,902 $ 36,975 $ 73,877 Software and Sensors 288,832 208,244 497,076 228,689 148,746 377,435 Total $ 360,037 $ 248,003 $ 608,040 $ 265,591 $ 185,721 $ 451,312 |
Capitalized Contract Cost | As of December 31, 2022, our assets for costs to obtain contracts were as follows (in thousands): December 31, 2022 December 31, 2021 Current deferred commissions (1) $ 29,405 $ 19,962 Deferred commissions, net of current portion (2) 93,213 54,028 $ 122,618 $ 73,990 (1) Current deferred commissions are included within prepaid expenses and other current assets on the accompanying consolidated balance sheet. (2) Deferred commissions, net of current portion, are included in other assets on the accompanying consolidated balance sheet. |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 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 The following table summarizes our cash, cash equivalents, and available-for-sale investments at December 31, 2021 (in thousands): As of December 31, 2021 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 353,488 $ — $ — $ 353,488 $ 353,488 $ — $ — $ — Level 1: Money market funds 2,844 — — 2,844 2,844 — — — Agency bonds 10,700 4 — 10,704 — — 10,704 — Marketable securities 90,000 — (17,820) 72,180 — 72,180 — — Subtotal 103,544 4 (17,820) 85,728 2,844 72,180 10,704 — Level 2: State and municipal obligations 2,570 — (5) 2,565 — — 1,400 1,165 Corporate bonds 32,748 1 (276) 32,473 — — 2,406 30,067 Subtotal 35,318 1 (281) 35,038 — — 3,806 31,232 Total $ 492,350 $ 5 $ (18,101) $ 474,254 $ 356,332 $ 72,180 $ 14,510 $ 31,232 |
Expected Credit Losses (Tables)
Expected Credit Losses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Expected Credit Losses | |
Schedule of roll-forward of allowance for credit losses | The following table provides a roll-forward of the allowance for expected credit losses that is deducted from the amortized cost basis of accounts receivable, notes receivable, and contract assets to present the net amount expected to be collected (in thousands): Year Ended December 31, 2022 Year Ended December 31, 2021 United States Other countries Total United States Other countries Total Balance, beginning of period $ 3,171 $ 178 $ 3,349 $ 2,902 $ 474 $ 3,376 Provision for (recovery of) expected credit losses 309 391 700 245 (291) (46) Amounts written off charged against the allowance (416) — (416) (54) — (54) Other, including foreign currency translation — (3) (3) 78 (5) 73 Balance, end of period $ 3,064 $ 566 $ 3,630 $ 3,171 $ 178 $ 3,349 |
Schedule of allowance for expected credit losses for each type of customer receivable | December 31, December 31, 2022 2021 Accounts receivable and notes receivable, current $ 2,176 $ 2,203 Contract assets, net 1,360 1,010 Long-term notes receivable, net of current portion 94 136 Total allowance for expected credit losses on customer receivables $ 3,630 $ 3,349 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory | |
Inventory | Inventory consisted of the following at December 31, 2022 and December 31, 2021 (in thousands): December 31, 2022 December 31, 2021 Raw materials $ 72,740 $ 38,267 Finished goods 129,731 70,421 Total inventory $ 202,471 $ 108,688 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Summary of Property and Equipment | Property and equipment consisted of the following at December 31 (in thousands): Estimated Useful Life December 31, 2022 December 31, 2021 Land N/A $ 51,612 $ 54,868 Building and leasehold improvements 3- 39 25,874 25,712 Production equipment 3- 5 57,170 54,090 Computers, equipment and software 3-5 years 25,154 15,343 Furniture and office equipment 3- 5 7,420 6,838 Vehicles 5 years 4,027 2,932 Capitalized internal software development costs 3 5 14,198 12,200 Construction-in-process N/A 62,283 25,258 Total cost 247,738 197,241 Less: Accumulated depreciation (77,895) (58,784) Property and equipment, net $ 169,843 $ 138,457 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets | |
Schedule of Goodwill | The changes in the carrying amount of goodwill for the year ended December 31, 2022 were as follows (in thousands): Software and TASER Sensors Total Balance, beginning of period $ 1,396 $ 42,196 $ 43,592 Goodwill acquired 1,674 — 1,674 Purchase accounting adjustments — (58) (58) Foreign currency translation adjustments (113) (112) (225) Balance, end of period $ 2,957 $ 42,026 $ 44,983 |
Intangible Assets Other than goodwill | Intangible assets (other than goodwill) consisted of the following (in thousands): December 31, 2022 December 31, 2021 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 $ (1,823) $ 1,220 $ 3,043 $ (1,518) $ 1,525 Issued patents 5 ‑ 25 years 2,981 (1,507) 1,474 3,061 (1,457) 1,604 Issued trademarks 3 ‑ 15 years 1,119 (713) 406 1,130 (643) 487 Customer relationships 4 ‑ 8 years 4,892 (2,995) 1,897 4,985 (2,439) 2,546 Non-compete agreements 3 ‑ 4 years 447 (447) — 454 (444) 10 Developed technology 3 ‑ 5 years 18,586 (13,244) 5,342 18,060 (10,465) 7,595 Total amortizable 31,068 (20,729) 10,339 30,733 (16,966) 13,767 Non-amortizable (indefinite-lived) intangible assets: TASER trademark 900 — 900 900 — 900 My90 trademark 168 — 168 168 — 168 Patents and trademarks pending 751 — 751 635 — 635 Total non-amortizable 1,819 — 1,819 1,703 — 1,703 Total intangible assets $ 32,887 $ (20,729) $ 12,158 $ 32,436 $ (16,966) $ 15,470 |
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): 2023 $ 3,786 2024 3,722 2025 887 2026 688 2027 354 Thereafter 902 Total $ 10,339 |
Strategic Investments (Tables)
Strategic Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 Year Ended December 31, 2021 Strategic investments Warrants Call options Total Strategic investments Warrants Total Balance, beginning of period $ 80,775 $ 2,745 $ — $ 83,520 $ 9,500 $ 2,211 $ 11,711 Investments 56,914 459 17,233 74,606 45,500 — 45,500 Observable price changes: Realized gains — — — — 12,312 — 12,312 Unrealized gains 44,376 28,539 — 72,915 28,009 534 28,543 Unrealized losses (1,108) — — (1,108) — — — Exercises 96,719 (30,089) — 66,630 — — — Sales — — — — (14,546) — (14,546) Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 $ 83,520 Inception to date Strategic investments Warrants Call options Total Investments $ 109,482 $ 3,047 $ 17,233 $ 129,762 Observable price changes: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses (1,108) (377) — (1,485) Exercises 96,719 (30,089) — 66,630 Sales (14,546) — — (14,546) Balance, end of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Variable Interest Entities | |
Schedule of the nonconsolidated VIEs | December 31, 2022 December 31, 2021 Total nonconsolidated variable interest entities: Carrying value of variable interest - assets $ 11,530 $ 895 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 11,530 895 Total $ 11,530 $ 895 (1) |
Other Long-Term Assets (Tables)
Other Long-Term Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Other Long-Term Assets. | |
Schedule of Other Long-Term Assets | Other long-term assets consisted of the following at December 31 (in thousands): December 31, 2022 December 31, 2021 Cash surrender value of corporate-owned life insurance policies $ 4,274 $ 5,276 Deferred commissions (1) 93,213 54,028 Restricted cash 54 57 Operating lease assets 38,370 23,270 Deferred implementation costs (2) 3,045 3,915 Prepaid expenses, deposits and other 20,660 11,701 Total other long-term assets $ 159,616 $ 98,247 (1) Represents the incremental costs of obtaining contracts with customers, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contracts and amortized consistent with the recognition timing of the revenue for the underlying performance obligations. See Note 2 “Costs to Obtain a Contract”. (2) During the year ended December 31, 2021, we completed an implementation of several software-as-a-service applications supporting our internal operations. Following the implementation, we placed $4.3 million of deferred implementation costs assets related to these applications into service. |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Liabilities | |
Schedule of Accrued liabilities | Accrued liabilities consisted of the following at December 31 (in thousands): December 31, 2022 December 31, 2021 Accrued salaries, benefits and bonus $ 97,882 $ 62,425 Accrued professional, consulting and lobbying fees 3,861 7,152 Accrued warranty expense 811 2,822 Accrued income and other taxes 13,559 3,736 Accrued inventory in transit 10,548 9,945 Other accrued expenses 29,273 17,627 Accrued liabilities $ 155,934 $ 103,707 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Senior Notes | |
Schedule of conversion price, initial conversion rate and number of shares for convertible senior notes | December 31, 2022 Initial Conversion Maturity Initial Conversion Rate per Initial Number Date Price per Share $1,000 Par Value of Shares 2027 Notes December 15, 2027 $ 228.73 4.3720 shares 3,016,680 |
Schedule of net carrying amount of convertible senior notes | December 31, 2022 December 31, 2021 Principal $ 690,000 $ — Unamortized debt issuance costs (16,033) — Convertible notes carrying amount, net $ 673,967 $ — |
Schedule of interest expense of convertible senior notes | December 31, 2022 December 31, 2021 Contractual interest expense $ 211 $ — Amortization of debt issuance costs 198 — Total interest expense $ 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, 2022 | |
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): 2022 2021 2020 United States $ 191,631 $ (146,995) $ (11,529) Foreign 4,887 5,620 5,238 Total $ 196,518 $ (141,375) $ (6,291) |
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): 2022 2021 2020 Current: Federal $ 10,804 $ (331) $ 5,277 State 10,118 85 3,886 Foreign 2,892 (60) 1,943 Total current 23,814 (306) 11,106 Deferred: Federal 26,238 (65,557) (10,175) State (2,002) (15,266) (3,111) Foreign (2,146) 478 (3,131) Total deferred 22,090 (80,345) (16,417) Tax impact of unrecorded tax benefits liability 3,475 (706) 744 Provision for income taxes (Income tax benefit) $ 49,379 $ (81,357) $ (4,567) |
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): 2022 2021 2020 Federal income tax at the statutory rate $ 41,283 $ (29,691) $ (1,321) State income taxes, net of federal benefit 7,928 (12,717) 935 Difference between statutory and foreign tax rates (428) (155) (86) Other permanent differences (1) 1,771 1,842 794 Foreign derived intangible income deduction (2,597) — (902) Executive compensation limitation 5,784 180,509 15,463 R&D credits (13,340) (34,376) (10,246) Return to provision adjustment (757) 204 (1,078) Change in liability for unrecognized tax benefits 3,215 10,188 987 Excess stock-based compensation benefit (4,616) (205,483) (9,002) Change in valuation allowance 10,216 8,961 163 Tax effects of intercompany transactions (417) 96 (389) Other 1,337 (735) 115 Provision for income taxes (Income tax benefit) $ 49,379 $ (81,357) $ (4,567) Effective tax rate 25.1 % 57.5 % 72.6 % (1) Other permanent differences include certain expenses that are not deductible for tax purposes including meals and entertainment, lobbying fees, and taxable income as a result of global intangible low-tax income ("GILTI"). |
Components of Deferred Income Tax Assets and Liabilities | Significant components of our deferred income tax assets and liabilities are as follows at December 31 (in thousands): 2022 2021 Deferred income tax assets: Net operating loss carryforward $ 4,874 $ 68,353 Deferred revenue 47,586 27,031 Deferred compensation 1,575 1,414 Lease liability 9,973 5,886 Inventory reserve 1,279 684 Stock based compensation 15,374 10,913 Amortization 2,820 2,672 R&D tax credit carryforward 12,826 29,249 Reserves, accruals, and other 17,732 14,717 R&D capitalization, net 46,122 — Convertible debt, net 48,378 — Total deferred income tax assets 208,539 160,919 Deferred income tax liabilities: Customer contract asset (552) (1,104) Right of use asset (8,748) (5,008) Depreciation (10,272) (8,938) Strategic investments (4,615) (2,653) Prepaid expenses (1,119) (594) Other — (72) Total deferred income tax liabilities (25,306) (18,369) Net deferred income tax assets before valuation allowance 183,233 142,550 Valuation allowance (26,368) (16,168) Net deferred income tax assets $ 156,865 $ 126,382 |
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): 2022 2021 2020 Balance, beginning of period $ 18,249 $ 7,657 $ 6,861 Increase (decrease) in previous year tax positions 232 22 (34) Increase in current year tax positions 3,343 11,416 950 Decrease due to lapse of statutes of limitations (332) (846) (120) Balance, end of period $ 21,492 $ 18,249 $ 7,657 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Equity Compensation Goals | Revenue Goal (1) (in thousands) Achievement Status Adjusted EBITDA (in thousands) Achievement Status Goal #1, $710,058 Achieved Goal #1, $125,000 Achieved Goal #2, $860,058 Achieved Goal #2, $155,000 Achieved Goal #3, $1,010,058 Achieved Goal #3, $175,000 Achieved Goal #4, $1,210,058 Probable Goal #4, $190,000 Achieved Goal #5, $1,410,058 Not Applicable Goal #5, $200,000 Achieved Goal #6, $1,610,058 Not Applicable Goal #6, $210,000 Achieved Goal #7, $1,810,058 Not Applicable Goal #7, $220,000 Achieved Goal #8, $2,010,058 Not Applicable Goal #8, $230,000 Achieved (1) In connection with the business acquisition that was completed during the three months ended June 30, 2018, the revenue goals were adjusted for the acquiree’s Target Revenue, as defined in the CEO Performance Award agreement. |
Summary of Restricted Stock Unit Activity | The following table summarizes RSU activity for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2022 2021 2020 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 1,115 $ 133.40 1,107 $ 76.10 1,249 $ 45.47 Granted 1,142 143.03 686 165.67 577 100.76 Released (541) 117.49 (554) 66.23 (598) 40.68 Forfeited (151) 138.99 (124) 100.64 (121) 52.40 Units outstanding, end of year 1,565 145.48 1,115 133.40 1,107 76.10 Aggregate intrinsic value at year end $ 259,729 |
Summary of Performance Stock Unit Activity | The following table summarizes PSU activity, inclusive of XSUs, for the years ended December 31 (number of units and aggregate intrinsic value in thousands): 2022 2021 2020 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 1,499 $ 39.86 5,618 $ 35.71 6,033 $ 34.47 Granted 158 106.57 309 77.53 417 58.11 Released (78) 107.58 (4,345) 37.16 (184) 27.79 Forfeited (210) 41.62 (83) 40.91 (648) 40.83 Units outstanding, end of year 1,369 43.43 1,499 39.86 5,618 35.71 Aggregate intrinsic value at year end $ 227,125 |
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): 2022 2021 2020 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 6,366 $ 28.58 6,431 $ 28.34 Granted — — — — — — Exercised — — (3,928) 28.58 (65) 4.52 Expired / terminated — — — — — — Options outstanding, end of year 2,438 28.58 2,438 28.58 6,366 28.58 Options exercisable, end of year 1,377 28.58 1,377 28.58 530 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, 2022 (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 1,377 $ 28.58 5.16 1,377 $ 28.58 5.16 |
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): 2022 2021 2020 Cost of product and service sales $ 4,607 $ 5,844 $ 3,464 Sales, general and administrative expenses 51,301 238,813 103,860 Research and development expenses 50,268 58,674 26,248 Total stock-based compensation expense $ 106,176 $ 303,331 $ 133,572 Income tax benefit $ 25,154 $ 30,586 $ 29,329 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (loss) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2019 $ — $ (1,096) $ (1,096) Other comprehensive income — 1,237 1,237 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) |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Balance Sheet Disclosures | Leases (in thousands) Classification December 31, 2022 December 31, 2021 Assets Operating lease assets Other assets $ 38,370 $ 23,270 Liabilities Current Operating Other current liabilities $ 6,357 $ 6,540 Noncurrent Operating Other long-term liabilities 37,143 20,440 Total lease liabilities $ 43,500 $ 26,980 |
Components of Lease Expense | The components of operating lease expense were as follows for the years ended December 31 (in thousands): Classification 2022 2021 2020 Operating lease expense Sales, general and administrative expenses (1) $ 4,388 $ 3,820 $ 3,762 Research and development expense 4,315 3,675 2,995 Total operating lease expense (2) 8,703 7,495 6,757 Sublease income Other income — — (55) Net lease expense $ 8,703 $ 7,495 $ 6,702 (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, 2022 December 31, 2021 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 9,216 $ 7,506 Right-of-use assets obtained in exchange for lease liabilities: Operating leases 21,815 6,726 Weighted average remaining lease term: Operating leases 7.2 years 4.2 years Weighted average discount rate: Operating leases 5.44 % 2.73 % |
Schedule of Future Minimum Rental Payments For Operating Leases | Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows (in thousands): Operating 2023 8,448 2024 8,936 2025 8,990 2026 5,374 2027 3,566 Thereafter 20,579 Total minimum lease payments 55,893 Less: Amount representing interest (12,393) Present value of lease payments $ 43,500 |
Segment Data (Tables)
Segment Data (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 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 For the year ended December 31, 2020 Software and TASER Sensors Total Net sales from products $ 362,649 $ 137,601 $ 500,250 Net sales from services 3,903 176,850 180,753 Net sales 366,552 314,451 681,003 Cost of product sales 136,925 87,206 224,131 Cost of service sales — 40,541 40,541 Cost of sales 136,925 127,747 264,672 Gross margin $ 229,627 $ 186,704 $ 416,331 Research and development $ 15,380 $ 107,815 $ 123,195 |
Supplemental Disclosure to Ca_2
Supplemental Disclosure to Cash Flows (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Supplemental Disclosure to Cash Flows | |
Summary of Supplemental Non-Cash and Other Cash Flow Information | Supplemental non-cash and other cash flow information were as follows as of and for the years ended December 31 (in thousands): 2022 2021 2020 Supplemental disclosures: Cash and cash equivalents $ 353,684 $ 356,332 $ 155,440 Restricted cash $ 1,868 $ 106 $ 111 Total cash, cash equivalents and restricted cash shown in the statements of cash flows $ 355,552 $ 356,438 $ 155,551 Cash paid for income taxes, net of refunds $ 10,508 $ 5,108 $ 10,893 Non-cash transactions: Property and equipment purchases in accounts payable $ 1,056 $ 1,994 878 Non-cash purchase consideration related to business combinations — 3,920 — |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Narrative (Details) | 12 Months Ended | ||||
Feb. 12, 2019 USD ($) tranche item | May 24, 2018 USD ($) item tranche shares | Dec. 31, 2022 USD ($) item customer country segment shares | Dec. 31, 2021 USD ($) country customer shares | Dec. 31, 2020 USD ($) customer country shares | |
Summary Of Significant Accounting Policy [Line Items] | |||||
Restricted cash balance | $ 1,900,000 | $ 100,000 | |||
Restricted cash including prepaid expenses and other assets | $ 1,800,000 | ||||
Number of primary revenue sources | item | 2 | ||||
Reserve for expected credit losses | $ 3,630,000 | 3,349,000 | $ 3,376,000 | ||
Additional credit loss expense | 700,000 | (46,000) | |||
Sales, general and administrative | $ 401,575,000 | 515,007,000 | 307,286,000 | ||
Warranty period | 1 year | ||||
Research and development costs | $ 233,810,000 | 194,026,000 | $ 123,195,000 | ||
Number of depository institutions | item | 3 | ||||
Aggregate balances in depository institution accounts | $ 139,900,000 | ||||
Cash surrender value of corporate-owned life insurance policies | 4,274,000 | $ 5,276,000 | |||
Denomination of notes used for determination of fair value | $ 1,000 | ||||
Number of reportable segments of company | segment | 2 | ||||
Market capitalization goal for such tranche | $ 2,500,000,000 | ||||
Market capitalization goal increment | $ 1,000,000,000 | ||||
Number of options, Granted (in shares) | shares | 0 | 0 | 0 | ||
Credit loss | $ 0 | $ 0 | |||
Impairment charges | $ 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 | country | 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 | $ 2,300,000 | $ 2,600,000 | $ 1,300,000 | ||
Performance Shares | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Number of options, Granted (in shares) | shares | 6,365,856 | ||||
Stock Options | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Number of options, Granted (in shares) | shares | 0 | 0 | 0 | ||
Chief Executive Officer | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Number of vesting tranches of share-based awards | tranche | 12 | ||||
Number of performance goals, revenue | item | 8 | ||||
Number of performance goals, adjusted EBITDA | item | 8 | ||||
2019 eXponential Stock Performance Plan | eXponential Stock Units | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Restricted stock, expiration period | 9 years | ||||
Number of vesting tranches of share-based awards | tranche | 12 | ||||
Market capitalization goal for such tranche | $ 2,500,000,000 | ||||
Market capitalization goal increment | $ 1,000,000,000 | ||||
Number of performance goals, revenue | item | 8 | ||||
Number of performance goals, adjusted EBITDA | item | 8 | ||||
Post-vest holding period | 2 years 6 months | ||||
Expected dividend yield (as percentage) | 0% | ||||
Minimum | 2019 eXponential Stock Performance Plan | eXponential Stock Units | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Liquidity discount (as percentage) | 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] | |||||
Number of options, Granted (in shares) | shares | 100,000 | ||||
Liquidity discount (as percentage) | 17.60% | ||||
Risk-free interest rate (as percentage) | 4.10% | ||||
Expected volatility (as percentage) | 55.80% | ||||
Design of New Headquarters | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Impairment of long-lived assets to be disposed | $ 700,000 | ||||
Office Improvements and Remodeling | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Impairment of leasehold | $ 500,000 | ||||
Seattle office | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Impairment of long-lived assets to be disposed | $ 3,300,000 | ||||
Seattle office | Research and development expenses | |||||
Summary Of Significant Accounting Policy [Line Items] | |||||
Impairment of long-lived assets to be disposed | 2,700,000 | ||||
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in Standard and Extended Product Warranty | |||
Balance, beginning of period | $ 2,822 | $ 769 | $ 1,476 |
Utilization of reserve | (2,209) | (873) | (700) |
Warranty expense | 198 | 2,926 | (7) |
Balance, end of period | $ 811 | $ 2,822 | $ 769 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator for basic and diluted earnings per share: | |||
Net income (loss) | $ 147,139 | $ (60,018) | $ (1,724) |
Denominator: | |||
Weighted average shares outstanding - basic (in shares) | 71,093 | 66,191 | 61,782 |
Dilutive effect of stock-based awards (in shares) | 1,441 | ||
Diluted weighted average shares outstanding (in shares) | 72,534 | 66,191 | 61,782 |
Net income (loss) per common share: | |||
Basic (in dollars per share) | $ 2.07 | $ (0.91) | $ (0.03) |
Diluted (in dollars per share) | $ 2.03 | $ (0.91) | $ (0.03) |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 9,298 | 7,690 | 12,150 |
Stock-based awards | |||
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 3,264 | 7,690 | 12,150 |
2027 Notes | |||
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 3,017 | ||
2027 Warrants | |||
Antidilutive securities excluded from computation of earnings per share | |||
Total potentially dilutive securities | 3,017 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies - Recently Issued Accounting Guidance (Details) | Jan. 01, 2022 USD ($) |
Accounting Standards Update 2020-06 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Outstanding debt | $ 0 |
Organization and Summary of S_9
Organization and Summary of Significant Accounting Policies - Correction of an Immaterial Error (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Provision for income taxes | $ 49,379 | $ (81,357) | $ (4,567) | |
Correction of an Immaterial Error | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Net sales | $ 8,500 | |||
Provision for income taxes | 2,100 | |||
Increase to net sales | $ 2,300 |
Revenues - Revenues By Products
Revenues - Revenues By Products And Service Offerings (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 1,189,935 | $ 863,381 | $ 681,003 |
TASER 7 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 224,905 | 135,906 | 107,506 |
TASER X26P | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 33,725 | 40,629 | 41,724 |
TASER X2 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 24,068 | 58,081 | 60,107 |
TASER Consumer devices | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 6,420 | 7,132 | 9,407 |
Cartridges | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 181,686 | 152,842 | 115,193 |
Axon Body | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 124,164 | 75,484 | 57,150 |
Axon Flex | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 3,031 | 4,155 | 4,082 |
Axon Fleet | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 63,017 | 24,319 | 20,108 |
Axon Dock | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 30,086 | 24,441 | 19,723 |
Axon Evidence and cloud services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 390,641 | 255,164 | 179,732 |
Extended warranties | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 78,773 | 57,811 | 45,162 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 29,419 | 27,417 | 21,109 |
TASER | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 531,566 | 436,927 | 366,552 |
TASER | TASER 7 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 224,905 | 135,906 | 107,506 |
TASER | TASER X26P | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 33,725 | 40,629 | 41,724 |
TASER | TASER X2 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 24,068 | 58,081 | 60,107 |
TASER | TASER Consumer devices | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 6,420 | 7,132 | 9,407 |
TASER | Cartridges | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 181,686 | 152,842 | 115,193 |
TASER | Axon Evidence and cloud services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 18,752 | 9,159 | 2,935 |
TASER | Extended warranties | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 29,008 | 24,125 | 20,754 |
TASER | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 13,002 | 9,053 | 8,926 |
Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 658,369 | 426,454 | 314,451 |
Software and Sensors | Axon Body | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 124,164 | 75,484 | 57,150 |
Software and Sensors | Axon Flex | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 3,031 | 4,155 | 4,082 |
Software and Sensors | Axon Fleet | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 63,017 | 24,319 | 20,108 |
Software and Sensors | Axon Dock | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 30,086 | 24,441 | 19,723 |
Software and Sensors | Axon Evidence and cloud services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 371,889 | 246,005 | 176,797 |
Software and Sensors | Extended warranties | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 49,765 | 33,686 | 24,408 |
Software and Sensors | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 16,417 | $ 18,364 | $ 12,183 |
Revenues - Revenues By Geograph
Revenues - Revenues By Geographic Area (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 1,189,935 | $ 863,381 | $ 681,003 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | 987,975 | 686,914 | 535,079 |
Other countries | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customers | $ 201,960 | $ 176,467 | $ 145,924 |
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) | 83% | 80% | 79% |
Revenue from Contract with Customer | Geographic Concentration Risk | Other countries | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk (as a percentage) | 17% | 20% | 21% |
Revenues - Additional Informati
Revenues - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Unbilled accounts receivable | $ 8,900 | ||
Payment due date from date of invoice | 30 days | ||
Net sales | $ 1,189,935 | $ 863,381 | $ 681,003 |
Taser 60 Plan | |||
Disaggregation of Revenue [Line Items] | |||
Interest income | 600 | 1,000 | 1,500 |
Sales, general and administrative expenses | |||
Disaggregation of Revenue [Line Items] | |||
Amortization related to deferred commissions | $ 24,200 | $ 16,600 | $ 11,300 |
Revenues - Contract Assets, Con
Revenues - Contract Assets, Contract Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues. | |||
Contract assets, net | $ 242,072 | $ 210,174 | $ 84,044 |
Contract liabilities (deferred revenue) | 608,040 | 451,312 | 275,181 |
Revenue recognized in the period from: | |||
Amounts included in contract liabilities at the beginning of the period | 261,271 | $ 177,812 | $ 135,513 |
Contract assets, balance increase | $ 31,900 | ||
Contract assets, percentage increase | 15.20% | ||
Contract liabilities, balance increase | $ 156,700 | ||
Contract liabilities, percentage increase | 34.70% |
Revenues - Summary of Deferred
Revenues - Summary of Deferred Revenue (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Disaggregation of Revenue [Line Items] | |||
Current | $ 360,037 | $ 265,591 | |
Long-Term | 248,003 | 185,721 | |
Total | 608,040 | 451,312 | $ 275,181 |
TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 71,205 | 36,902 | |
Long-Term | 39,759 | 36,975 | |
Total | 110,964 | 73,877 | |
Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 288,832 | 228,689 | |
Long-Term | 208,244 | 148,746 | |
Total | 497,076 | 377,435 | |
Warranty | |||
Disaggregation of Revenue [Line Items] | |||
Current | 40,436 | 44,432 | |
Long-Term | 32,956 | 22,903 | |
Total | 73,392 | 67,335 | |
Warranty | TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 14,207 | 21,257 | |
Long-Term | 17,618 | 4,766 | |
Total | 31,825 | 26,023 | |
Warranty | Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 26,229 | 23,175 | |
Long-Term | 15,338 | 18,137 | |
Total | 41,567 | 41,312 | |
Hardware | |||
Disaggregation of Revenue [Line Items] | |||
Current | 99,787 | 47,806 | |
Long-Term | 121,867 | 109,950 | |
Total | 221,654 | 157,756 | |
Hardware | TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 49,361 | 12,944 | |
Long-Term | 12,640 | 28,727 | |
Total | 62,001 | 41,671 | |
Hardware | Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 50,426 | 34,862 | |
Long-Term | 109,227 | 81,223 | |
Total | 159,653 | 116,085 | |
Software and Sensors. | |||
Disaggregation of Revenue [Line Items] | |||
Current | 219,814 | 173,353 | |
Long-Term | 93,180 | 52,868 | |
Total | 312,994 | 226,221 | |
Software and Sensors. | TASER | |||
Disaggregation of Revenue [Line Items] | |||
Current | 7,637 | 2,701 | |
Long-Term | 9,501 | 3,482 | |
Total | 17,138 | 6,183 | |
Software and Sensors. | Software and Sensors | |||
Disaggregation of Revenue [Line Items] | |||
Current | 212,177 | 170,652 | |
Long-Term | 83,679 | 49,386 | |
Total | $ 295,856 | $ 220,038 |
Revenues - Revenue Performance
Revenues - Revenue Performance Obligations (Details) $ in Billions | Dec. 31, 2022 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 4.6 |
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
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]: 2023-01-01 | |
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, 2022 | Dec. 31, 2021 |
Revenues. | ||
Current deferred commissions | $ 29,405 | $ 19,962 |
Deferred commissions, net of current portion | 93,213 | 54,028 |
Deferred sales commission | $ 122,618 | $ 73,990 |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | $ 1,183,222 | $ 492,350 | |
Gross Unrealized Gains | 57 | 5 | |
Gross Unrealized Losses | (52,379) | (18,101) | |
Fair Value | 1,130,900 | 474,254 | |
Cash and Cash Equivalents | 353,684 | 356,332 | |
Marketable Securities | 39,240 | 72,180 | |
Short-Term Investments | 14,510 | ||
Long-Term Investments | 156,207 | 31,232 | |
Cash and cash equivalents | 353,684 | 356,332 | $ 155,440 |
Short-term investments | 581,769 | 14,510 | |
Long-term investments | 156,207 | 31,232 | |
Marketable securities, unrealized gain (loss) | (32,900) | ||
Carrying amount of held-to-maturity securities sold | 165,400 | ||
Debt securities, available-for-sale, unrealized Loss | 349,600 | ||
Common stock | Share Purchase Agreement with CLBT | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Marketable Securities | $ 90,000 | ||
Investment owned, shares held | 9,000,000 | ||
Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 378,805 | $ 103,544 | |
Gross Unrealized Gains | 24 | 4 | |
Gross Unrealized Losses | (51,026) | (17,820) | |
Fair Value | 327,803 | 85,728 | |
Cash and Cash Equivalents | 115,769 | 2,844 | |
Marketable Securities | 39,240 | 72,180 | |
Short-Term Investments | 10,704 | ||
Long-Term Investments | 94,367 | ||
Short-term investments | 78,427 | ||
Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 660,673 | 35,318 | |
Gross Unrealized Gains | 33 | 1 | |
Gross Unrealized Losses | (1,353) | (281) | |
Fair Value | 659,353 | 35,038 | |
Cash and Cash Equivalents | 94,171 | ||
Short-Term Investments | 3,806 | ||
Long-Term Investments | 61,840 | 31,232 | |
Short-term investments | 503,342 | ||
Cash | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 143,744 | 353,488 | |
Fair Value | 143,744 | 353,488 | |
Cash and Cash Equivalents | 143,744 | 353,488 | |
Money market funds | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 2,669 | 2,844 | |
Fair Value | 2,669 | 2,844 | |
Cash and Cash Equivalents | 2,669 | 2,844 | |
Agency bonds | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 164,486 | 10,700 | |
Gross Unrealized Gains | 6 | 4 | |
Gross Unrealized Losses | (263) | ||
Fair Value | 164,229 | 10,704 | |
Short-Term Investments | 10,704 | ||
Long-Term Investments | 94,367 | ||
Short-term investments | 69,862 | ||
Treasury bills | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 121,650 | ||
Gross Unrealized Gains | 18 | ||
Gross Unrealized Losses | (3) | ||
Fair Value | 121,665 | ||
Cash and Cash Equivalents | 113,100 | ||
Short-term investments | 8,565 | ||
Marketable securities | Fair Value, Inputs, Level 1 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 90,000 | 90,000 | |
Gross Unrealized Losses | (50,760) | (17,820) | |
Fair Value | 39,240 | 72,180 | |
Marketable Securities | 39,240 | 72,180 | |
State and municipal obligations | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 4,980 | 2,570 | |
Gross Unrealized Losses | (33) | (5) | |
Fair Value | 4,947 | 2,565 | |
Short-Term Investments | 1,400 | ||
Long-Term Investments | 1,165 | ||
Short-term investments | 4,947 | ||
Certificates of deposit | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 5,002 | ||
Fair Value | 5,002 | ||
Short-term investments | 5,002 | ||
Term Deposit | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 200,000 | ||
Fair Value | 200,000 | ||
Cash and Cash Equivalents | 25,000 | ||
Short-term investments | 175,000 | ||
Corporate bonds | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 257,422 | 32,748 | |
Gross Unrealized Gains | 33 | 1 | |
Gross Unrealized Losses | (1,159) | (276) | |
Fair Value | 256,296 | 32,473 | |
Cash and Cash Equivalents | 28,883 | ||
Short-Term Investments | 2,406 | ||
Long-Term Investments | 59,339 | $ 30,067 | |
Short-term investments | 168,074 | ||
Commercial paper | Fair Value, Inputs, Level 2 | |||
Restricted Cash and Cash Equivalents Items [Line Items] | |||
Amortized Cost | 160,241 | ||
Fair Value | 160,241 | ||
Cash and Cash Equivalents | 40,288 | ||
Short-term investments | 119,953 | ||
US Government Debt Securities | 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 | 2,503 | ||
Gross Unrealized Losses | (2) | ||
Fair Value | 2,501 | ||
Long-Term Investments | $ 2,501 |
Expected Credit Losses (Details
Expected Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | $ 3,349 | $ 3,376 |
Provision for (recovery of) expected credit losses | 700 | (46) |
Amounts written off charged against the allowance | (416) | (54) |
Other, including foreign currency translation | (3) | 73 |
Balance, end of period | 3,630 | 3,349 |
United States | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | 3,171 | 2,902 |
Provision for (recovery of) expected credit losses | 309 | 245 |
Amounts written off charged against the allowance | (416) | (54) |
Other, including foreign currency translation | 78 | |
Balance, end of period | 3,064 | 3,171 |
Other countries | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | 178 | 474 |
Provision for (recovery of) expected credit losses | 391 | (291) |
Other, including foreign currency translation | (3) | (5) |
Balance, end of period | $ 566 | $ 178 |
Expected Credit Losses - Type O
Expected Credit Losses - Type Of Customer Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Expected Credit Losses | ||
Accounts receivable and notes receivable, current | $ 2,176 | $ 2,203 |
Contract assets, net | 1,360 | 1,010 |
Long-term notes receivable, net of current portion | 94 | 136 |
Total allowance for expected credit losses on customer receivables | $ 3,630 | $ 3,349 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory | ||
Raw materials | $ 72,740 | $ 38,267 |
Finished goods | 129,731 | 70,421 |
Total inventory | $ 202,471 | $ 108,688 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 247,738 | $ 197,241 | |
Less: Accumulated depreciation | (77,895) | (58,784) | |
Property and equipment, net | 169,843 | 138,457 | |
Depreciation expense | 20,400 | 15,800 | $ 9,200 |
Land | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | 51,612 | 54,868 | |
Building and leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 25,874 | 25,712 | |
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 | $ 57,170 | 54,090 | |
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 | $ 25,154 | 15,343 | |
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 | $ 7,420 | 6,838 | |
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 | $ 4,027 | 2,932 | |
Capitalized internal software development costs | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 14,198 | 12,200 | |
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 | $ 62,283 | $ 25,258 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization expense relative to property and equipment | $ 20,400 | $ 15,800 | $ 9,200 |
Total cost | 247,738 | 197,241 | |
Cost of sales | 461,297 | 322,471 | 264,672 |
Property, Plant and Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Cost of sales | 8,500 | 6,300 | $ 4,000 |
Capitalized internal software development costs | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | 14,198 | 12,200 | |
Construction-in-progress related to development | |||
Property, Plant and Equipment [Line Items] | |||
Total cost | $ 28,300 | $ 12,400 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Changes in carrying amount of goodwill | |
Balance, beginning of period | $ 43,592 |
Goodwill acquired | 1,674 |
Purchase accounting adjustments | (58) |
Foreign currency translation adjustments | (225) |
Balance, end of period | 44,983 |
TASER | |
Changes in carrying amount of goodwill | |
Balance, beginning of period | 1,396 |
Goodwill acquired | 1,674 |
Foreign currency translation adjustments | (113) |
Balance, end of period | 2,957 |
Software and Sensors | |
Changes in carrying amount of goodwill | |
Balance, beginning of period | 42,196 |
Purchase accounting adjustments | (58) |
Foreign currency translation adjustments | (112) |
Balance, end of period | $ 42,026 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 31,068 | $ 30,733 | |
Accumulated Amortization | (20,729) | (16,966) | |
Total | 10,339 | 13,767 | |
Not amortized, Gross Carrying Amount | 1,819 | 1,703 | |
Intangible assets, Gross Carrying Amount | 32,887 | 32,436 | |
Intangible assets, Net Carrying Amount | 12,158 | 15,470 | |
Amortization expense of intangible assets | 4,000 | 2,900 | $ 3,300 |
TASER trademark | |||
Intangible Assets [Line Items] | |||
Not amortized, Gross Carrying Amount | 900 | 900 | |
My90 trademark | |||
Intangible Assets [Line Items] | |||
Not amortized, Gross Carrying Amount | 168 | 168 | |
Patents and trademarks pending | |||
Intangible Assets [Line Items] | |||
Not amortized, Gross Carrying Amount | 751 | 635 | |
Domain names | |||
Intangible Assets [Line Items] | |||
Gross Carrying Amount | 3,043 | 3,043 | |
Accumulated Amortization | (1,823) | (1,518) | |
Total | $ 1,220 | 1,525 | |
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 | $ 2,981 | 3,061 | |
Accumulated Amortization | (1,507) | (1,457) | |
Total | $ 1,474 | 1,604 | |
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 | $ 1,119 | 1,130 | |
Accumulated Amortization | (713) | (643) | |
Total | $ 406 | 487 | |
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 | $ 4,892 | 4,985 | |
Accumulated Amortization | (2,995) | (2,439) | |
Total | $ 1,897 | 2,546 | |
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 | $ 447 | 454 | |
Accumulated Amortization | $ (447) | (444) | |
Total | 10 | ||
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 | $ 18,586 | 18,060 | |
Accumulated Amortization | (13,244) | (10,465) | |
Total | $ 5,342 | $ 7,595 | |
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, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets | ||
2023 | $ 3,786 | |
2024 | 3,722 | |
2025 | 887 | |
2026 | 688 | |
2027 | 354 | |
Thereafter | 902 | |
Total | $ 10,339 | $ 13,767 |
Strategic Investments (Details)
Strategic Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | 34 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | |
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | $ 83,520 | $ 11,711 | |
Investments | 74,606 | 45,500 | $ 129,762 |
Observable price changes, Realized gains | 12,312 | 12,312 | |
Observable price changes, Unrealized gains | 72,915 | 28,543 | 103,890 |
Observable price changes, Unrealized losses | (1,108) | (1,485) | |
Exercises | 66,630 | 66,630 | |
Sales | (14,546) | (14,546) | |
Balance, end of period | 296,563 | 83,520 | 296,563 |
Investment in unconsolidated affiliate | 296,563 | 83,520 | 296,563 |
Exercise price of warrants | 6,600 | ||
Unrealized gains on warrants exercised | 60,100 | ||
Strategic investments | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 80,775 | 9,500 | |
Investments | 56,914 | 45,500 | 109,482 |
Observable price changes, Realized gains | 12,312 | 12,312 | |
Observable price changes, Unrealized gains | 44,376 | 28,009 | 74,817 |
Observable price changes, Unrealized losses | (1,108) | (1,108) | |
Exercises | 96,719 | 96,719 | |
Sales | (14,546) | (14,546) | |
Balance, end of period | 277,676 | 80,775 | 277,676 |
Investment in unconsolidated affiliate | 277,676 | 80,775 | 277,676 |
Warrants | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Balance, beginning of period | 2,745 | 2,211 | |
Investments | 459 | 3,047 | |
Observable price changes, Unrealized gains | 28,539 | 534 | 29,073 |
Observable price changes, Unrealized losses | (377) | ||
Exercises | (30,089) | (30,089) | |
Balance, end of period | 1,654 | 2,745 | 1,654 |
Investment in unconsolidated affiliate | 1,654 | $ 2,745 | 1,654 |
Call options | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Investments | 17,233 | 17,233 | |
Balance, end of period | 17,233 | 17,233 | |
Investment in unconsolidated affiliate | $ 17,233 | $ 17,233 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Total nonconsolidated variable interest entities: | ||
Carrying value of variable interest - assets | $ 2,851,894 | $ 1,688,210 |
Carrying value of variable interest - liabilities | 1,583,403 | 640,361 |
Nonconsolidated VIEs | ||
Total nonconsolidated variable interest entities: | ||
Carrying value of variable interest - assets | 11,530 | 895 |
Maximum exposure to loss: | ||
Non-public equity | 11,530 | 895 |
Total | $ 11,530 | $ 895 |
Other Long-Term Assets (Details
Other Long-Term Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2022 | |
Other Long-Term Assets. | ||
Cash surrender value of corporate-owned life insurance policies | $ 5,276 | $ 4,274 |
Deferred commissions | 54,028 | 93,213 |
Restricted cash | 57 | 54 |
Operating lease assets | $ 23,270 | $ 38,370 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total other long-term assets | Total other long-term assets |
Deferred implementation costs | $ 3,915 | $ 3,045 |
Prepaid expenses, deposits and other | 11,701 | 20,660 |
Total other long-term assets | 98,247 | $ 159,616 |
Deferred implementation costs assets placed into service | $ 4,300 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities | ||||
Accrued salaries, benefits and bonus | $ 97,882 | $ 62,425 | ||
Accrued professional, consulting and lobbying fees | 3,861 | 7,152 | ||
Accrued warranty expense | 811 | 2,822 | $ 769 | $ 1,476 |
Accrued income and other taxes | 13,559 | 3,736 | ||
Accrued inventory in transit | 10,548 | 9,945 | ||
Other accrued expenses | 29,273 | 17,627 | ||
Accrued liabilities | $ 155,934 | $ 103,707 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) | 1 Months Ended | 12 Months Ended |
Dec. 31, 2022 USD ($) D | Dec. 31, 2022 USD ($) D | |
Senior Convertible Notes | ||
Net proceeds from issuance of notes | $ 673,769,000 | |
Sinking fund | 0 | |
Denomination of notes used for determination of fair value | $ 1,000 | 1,000 |
2027 Notes | ||
Senior Convertible Notes | ||
Aggregate principal amount | $ 690,000,000 | $ 690,000,000 |
Interest rate (as a percent) | 0.50% | 0.50% |
Net proceeds from issuance of notes | $ 673,800,000 | |
Principal amount denomination for conversion | $ 1,000 | $ 1,000 |
Threshold trading days | D | 20 | 20 |
Consecutive trading days | D | 30 | 30 |
Convertible threshold, percentage of stock price trigger (as a percent) | 130% | 130% |
Threshold business days | D | 5 | |
Consecutive business days | D | 10 | |
Trading price per $1,000 principal amount of notes (as percentage) | 98% | |
Repurchase price (as percentage) | 100% | 100% |
Carrying amount of notes | $ 674,000,000 | $ 674,000,000 |
Unamortized issuance costs | 16,000,000 | 16,000,000 |
Issuance costs | $ 16,200,000 | $ 16,200,000 |
Effective interest rate | 0.99% | 0.99% |
Fair value of notes | $ 687,300,000 | $ 687,300,000 |
Denomination of notes used for determination of fair value | 1,000 | 1,000 |
Initial conversion price | 0 | |
2027 Notes | Maximum | ||
Senior Convertible Notes | ||
Additional principal amount purchase option | $ 90,000,000 | $ 90,000,000 |
Convertible Senior Notes - Conv
Convertible Senior Notes - Conversion Table (Details) - 2027 Notes | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Senior Convertible Notes | |
Initial Conversion Price per Share | $ / shares | $ 228.73 |
Initial Conversion Rate per $1,000 Par Value | 4.3720 |
Initial Number of Shares | shares | 3,016,680 |
Convertible Senior Notes - Net
Convertible Senior Notes - Net carrying amount (Details) - 2027 Notes $ in Thousands | Dec. 31, 2022 USD ($) |
Senior Convertible Notes | |
Principal | $ 690,000 |
Unamortized debt issuance costs | (16,033) |
Convertible note carrying amount, net | $ 673,967 |
Convertible Senior Notes - Inte
Convertible Senior Notes - Interest Expense (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Senior Convertible Notes | |
Amortization of debt issuance costs | $ 198,000 |
Convertible Note Hedge 2027 | |
Senior Convertible Notes | |
Contractual interest expense | 211,000 |
Amortization of debt issuance costs | 198,000 |
Total interest expense | $ 409,000 |
Convertible Senior Notes - Hedg
Convertible Senior Notes - Hedge (Details) - 2027 Note Hedge | Dec. 31, 2022 USD ($) |
Senior Convertible Notes | |
Purchase price | $ 194,994 |
Shares purchased | 3,016,680 |
Convertible Senior Notes - Warr
Convertible Senior Notes - Warrants (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) D $ / security shares | |
Senior Convertible Notes | |
Proceeds | $ 124,269,000 |
2027 Warrant | |
Senior Convertible Notes | |
Proceeds | $ 124,269 |
Shares | shares | 3,016,680 |
Strike Price | $ / security | 338.86 |
Warrants exercise trading day period | D | 60 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) lawsuit | |
Loss Contingencies [Line Items] | |
Open purchase order | $ 499.7 |
Other purchase obligation | $ 415.4 |
Number of lawsuits against Company | lawsuit | 4 |
Amount self-insured for any product claim | $ 5 |
Line of Credit | |
Loss Contingencies [Line Items] | |
Letters of credit outstanding amount | $ 7 |
Data Storage | |
Loss Contingencies [Line Items] | |
Purchase commitment period | 6 years |
Purchase obligation | $ 425 |
Storage fees | 23.8 |
Remaining purchase commitment | 401.2 |
Surety Bond | |
Loss Contingencies [Line Items] | |
Letters of credit outstanding amount | 7 |
Bonds outstanding | 18 |
Expiring in 2023 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | 7.5 |
Expiring in 2024 | Surety Bond | |
Loss Contingencies [Line Items] | |
Bonds outstanding | $ 10.5 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Contingency [Line Items] | ||
Federal research and development tax credit carryforwards subject to limitation | $ 0.1 | |
Liability for unrecognized tax benefits | 21.5 | |
Unrecognized tax benefits, accrued interest | $ 0.3 | $ 0.2 |
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 | $ 4.1 | |
Federal | ||
Income Tax Contingency [Line Items] | ||
Federal research and development credit carry forwards | 4.4 | |
State | ||
Income Tax Contingency [Line Items] | ||
Deferred tax assets, state NOLs | 89.5 | |
State research and development credit carry forwards | $ 21.6 |
Income Taxes - Income by Region
Income Taxes - Income by Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
United States | $ 191,631 | $ (146,995) | $ (11,529) |
Foreign | 4,887 | 5,620 | 5,238 |
Income (loss) before provision (benefit) for income taxes | $ 196,518 | $ (141,375) | $ (6,291) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of the Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 10,804 | $ (331) | $ 5,277 |
State | 10,118 | 85 | 3,886 |
Foreign | 2,892 | (60) | 1,943 |
Total current | 23,814 | (306) | 11,106 |
Deferred: | |||
Federal | 26,238 | (65,557) | (10,175) |
State | (2,002) | (15,266) | (3,111) |
Foreign | (2,146) | 478 | (3,131) |
Total deferred | 22,090 | (80,345) | (16,417) |
Tax impact of unrecorded tax benefits liability | 3,475 | (706) | 744 |
Provision for income taxes (Income tax benefit) | $ 49,379 | $ (81,357) | $ (4,567) |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
Federal income tax at the statutory rate | $ 41,283 | $ (29,691) | $ (1,321) |
State income taxes, net of federal benefit | 7,928 | (12,717) | 935 |
Difference between statutory and foreign tax rates | (428) | (155) | (86) |
Other permanent differences | 1,771 | 1,842 | 794 |
Foreign derived intangible income deduction | (2,597) | (902) | |
Executive compensation limitation | 5,784 | 180,509 | 15,463 |
R&D credits | (13,340) | (34,376) | (10,246) |
Return to provision adjustment | (757) | 204 | (1,078) |
Change in liability for unrecognized tax benefits | 3,215 | 10,188 | 987 |
Excess stock-based compensation benefit | (4,616) | (205,483) | (9,002) |
Change in valuation allowance | 10,216 | 8,961 | 163 |
Tax effects of intercompany transactions | (417) | 96 | (389) |
Other | 1,337 | (735) | 115 |
Provision for income taxes (Income tax benefit) | $ 49,379 | $ (81,357) | $ (4,567) |
Effective tax rate (as a percentage) | 25.10% | 57.50% | 72.60% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred income tax assets: | ||
Net operating loss carryforward | $ 4,874 | $ 68,353 |
Deferred revenue | 47,586 | 27,031 |
Deferred compensation | 1,575 | 1,414 |
Lease liability | 9,973 | 5,886 |
Inventory reserve | 1,279 | 684 |
Stock based compensation | 15,374 | 10,913 |
Amortization | 2,820 | 2,672 |
R&D tax credit carryforward | 12,826 | 29,249 |
Reserves, accruals, and other | 17,732 | 14,717 |
R&D capitalization, net | 46,122 | |
Convertible debt, net | 48,378 | |
Total deferred income tax assets | 208,539 | 160,919 |
Deferred income tax liabilities: | ||
Customer contract asset | (552) | (1,104) |
Right of use asset | (8,748) | (5,008) |
Depreciation | (10,272) | (8,938) |
Strategic investments | (4,615) | (2,653) |
Prepaid expenses | (1,119) | (594) |
Other | (72) | |
Total deferred income tax liabilities | (25,306) | (18,369) |
Net deferred income tax assets before valuation allowance | 183,233 | 142,550 |
Valuation allowance | (26,368) | (16,168) |
Net deferred income tax assets | $ 156,865 | $ 126,382 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of Unrecognized Tax Benefits | |||
Balance, beginning of period | $ 18,249 | $ 7,657 | $ 6,861 |
Decrease in previous years tax positions | (34) | ||
Increase in previous year tax positions | 232 | 22 | |
Increase in current year tax positions | 3,343 | 11,416 | 950 |
Decrease due to lapse of statutes of limitations | (332) | (846) | (120) |
Balance, end of period | $ 21,492 | $ 18,249 | $ 7,657 |
Line of Credit (Details)
Line of Credit (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | |
Debt instrument covenant consolidated leverage ratio | 0.97 |
Senior Unsecured Multi Currency Revolving Credit Facility | |
Debt Instrument [Line Items] | |
Total availability under line of credit agreement | $ 200 |
Letter of Credit | |
Debt Instrument [Line Items] | |
Total availability under line of credit agreement | 30 |
Line of Credit | |
Debt Instrument [Line Items] | |
Accordion feature allowing for increase in borrowing capacity | 300 |
Letters of credit outstanding amount | 7 |
Available borrowing under letter of credit | 193 |
Line of credit borrowings | $ 0 |
Line of Credit | 2027 Notes | |
Debt Instrument [Line Items] | |
Debt Instrument, Maturity, Prior to Stated Maturity of Convertible Senior Notes | 6 months |
Percentage of convertible senior notes | 0.50% |
Minimum | |
Debt Instrument [Line Items] | |
Debt instrument covenant consolidated interest coverage ratio | 3.50 |
Minimum | Line of Credit | Secured Overnight Financing Rate (SOFR) | |
Debt Instrument [Line Items] | |
Debt instrument basis spread on variable rate (as a percentage) | 1.25% |
Maximum | |
Debt Instrument [Line Items] | |
Debt instrument covenant consolidated leverage ratio | 3.50 |
Maximum | Line of Credit | Secured Overnight Financing Rate (SOFR) | |
Debt Instrument [Line Items] | |
Debt instrument basis spread on variable rate (as a percentage) | 1.75% |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock and Preferred Stock (Details) | 12 Months Ended | |
Dec. 31, 2022 item $ / shares shares | Dec. 31, 2021 $ / 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, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for grant (in shares) | 2.7 | |
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 Thousands | 12 Months Ended | 55 Months Ended | |||
May 24, 2018 USD ($) item tranche shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 shares | Dec. 31, 2020 shares | Dec. 31, 2022 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Performance shares authorized (in shares) | shares | 0 | 0 | 0 | ||
Market capitalization goal for such tranche | $ 2,500,000 | ||||
Market capitalization goal increment | $ 1,000,000 | ||||
Recorded share-based compensation expense | $ 243,900 | ||||
Number of awards expected to vest | shares | 1,100,000 | 1,100,000 | |||
Revenue goal number 1 | $ 710,058 | $ 710,058 | |||
Revenue goal number 2 | 860,058 | 860,058 | |||
Revenue goal number 3 | 1,010,058 | 1,010,058 | |||
Revenue goal number 4 | 1,210,058 | 1,210,058 | |||
Revenue goal number 5 | 1,410,058 | 1,410,058 | |||
Revenue goal number 6 | 1,610,058 | 1,610,058 | |||
Revenue goal number 7 | 1,810,058 | 1,810,058 | |||
Revenue goal number 8 | 2,010,058 | 2,010,058 | |||
Adjusted EBITDA goal number 1 | 125,000 | 125,000 | |||
Adjusted EBITDA goal number 2 | 155,000 | 155,000 | |||
Adjusted EBITDA goal number 3 | 175,000 | 175,000 | |||
Adjusted EBITDA goal number 4 | 190,000 | 190,000 | |||
Adjusted EBITDA goal number 5 | 200,000 | 200,000 | |||
Adjusted EBITDA goal number 6 | 210,000 | 210,000 | |||
Adjusted EBITDA goal number 7 | 220,000 | 220,000 | |||
Adjusted EBITDA goal number 8 | $ 230,000 | 230,000 | |||
Performance Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Performance shares authorized (in shares) | shares | 6,365,856 | ||||
Number of options vested | shares | 5,300,000 | ||||
Weighted average period over which costs are recognized | 2 months 12 days | ||||
CEO Performance Award | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized share-based compensation cost related to unvested stock option awards, probable of achievement | $ 2,100 | $ 2,100 | |||
Chief Executive Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of vesting tranches of share-based awards | tranche | 12 | ||||
Vesting period | 10 years | ||||
Number of performance goals, revenue | item | 8 | ||||
Number of performance goals, adjusted EBITDA | item | 8 |
Stockholders' Equity - eXponent
Stockholders' Equity - eXponential Stock Performance Plan (Details) $ in Millions | 12 Months Ended | 55 Months Ended | |||||
Feb. 12, 2019 USD ($) tranche item | Jan. 02, 2019 | May 24, 2018 USD ($) | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 shares | Dec. 31, 2020 shares | Dec. 31, 2022 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Performance shares authorized (in shares) | shares | 0 | 0 | 0 | ||||
Market capitalization goal for such tranche | $ 2,500 | ||||||
Market capitalization goal increment | $ 1,000 | ||||||
Recorded share-based compensation expense | $ 243.9 | ||||||
Number of awards expected to vest | shares | 1,100,000 | 1,100,000 | |||||
eXponential Stock Units | 2019 eXponential Stock Performance Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expiration period | 9 years | ||||||
Number of Units, Granted (in shares) | shares | 74,000 | ||||||
Number of vesting tranches of share-based awards | tranche | 12 | ||||||
Market capitalization goal for such tranche | $ 2,500 | ||||||
Number of performance goals, revenue | item | 8 | ||||||
Number of performance goals, adjusted EBITDA | item | 8 | ||||||
Market capitalization goal increment | $ 1,000 | ||||||
Anti-dilution provision, maximum shares growth rate per year | 3% | ||||||
Recorded share-based compensation expense | $ 186.2 | ||||||
Number of awards expected to vest | shares | 1,200,000 | 1,200,000 | |||||
Unrecognized stock-based compensation expense | $ 14.7 | $ 14.7 | |||||
Weighted average period over which costs are recognized | 1 year 2 months 12 days | ||||||
eXponential Stock Units | 2019 eXponential Stock Performance Plan | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Performance shares authorized (in shares) | shares | 100,000 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
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) | 1,115 | 1,107 | 1,249 |
Number of Units, Granted (in shares) | 1,142 | 686 | 577 |
Number of Units, Released (in shares) | (541) | (554) | (598) |
Number of Units, Forfeited (in shares) | (151) | (124) | (121) |
Number of Units outstanding, end of period (in shares) | 1,565 | 1,115 | 1,107 |
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) | $ 133.40 | $ 76.10 | $ 45.47 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | 143.03 | 165.67 | 100.76 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | 117.49 | 66.23 | 40.68 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | 138.99 | 100.64 | 52.40 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ 145.48 | $ 133.40 | $ 76.10 |
Aggregate intrinsic value at year end | $ 259,729 | ||
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) | 1,499 | 5,618 | 6,033 |
Number of Units, Granted (in shares) | 158 | 309 | 417 |
Number of Units, Released (in shares) | (78) | (4,345) | (184) |
Number of Units, Forfeited (in shares) | (210) | (83) | (648) |
Number of Units outstanding, end of period (in shares) | 1,369 | 1,499 | 5,618 |
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) | $ 39.86 | $ 35.71 | $ 34.47 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | 106.57 | 77.53 | 58.11 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | 107.58 | 37.16 | 27.79 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | 41.62 | 40.91 | 40.83 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ 43.43 | $ 39.86 | $ 35.71 |
Aggregate intrinsic value at year end | $ 227,125 |
Stockholders' Equity - RSU and
Stockholders' Equity - RSU and PSU - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | 55 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | Dec. 30, 2022 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Tax payments, for net share settlement of share based award | $ 4,870 | $ 331,309 | $ 7,809 | |||
Recorded share-based compensation expense | $ 243,900 | |||||
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Aggregate intrinsic value price per share (in dollars per share) | $ 165.93 | |||||
Aggregate intrinsic value, RSUs vested | $ 84,900 | $ 96,400 | $ 56,000 | |||
Shares withheld, for net share settlement of share based award (in shares) | 11 | |||||
Tax payments, for net share settlement of share based award | $ 1,600 | |||||
Performance criteria had been met (in shares) | 541 | 554 | 598 | |||
Number of units outstanding (in shares) | 1,565 | 1,115 | 1,107 | 1,565 | 1,249 | |
Unrecognized stock-based compensation expense related to non-vested stock options | $ 192,700 | $ 192,700 | ||||
Weighted average period over which costs are recognized | 2 years 3 months 25 days | |||||
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) | $ 165.93 | $ 165.93 | ||||
Shares withheld, for net share settlement of share based award (in shares) | 26 | |||||
Tax payments, for net share settlement of share based award | $ 3,300 | |||||
Performance criteria had been met (in shares) | 78 | 4,345 | 184 | |||
Number of units outstanding (in shares) | 1,369 | 1,499 | 5,618 | 1,369 | 6,033 | |
Unrecognized stock-based compensation expense related to non-vested stock options | $ 19,200 | $ 19,200 | ||||
Weighted average period over which costs are recognized | 1 year 2 months 1 day | |||||
Performance criteria had been met (in shares) | 20 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Number of options, Granted (in shares) | 0 | 0 | 0 |
Stock Options | |||
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 | 6,366,000 | 6,431,000 |
Number of options, Granted (in shares) | 0 | 0 | 0 |
Number of options, Exercised (in shares) | 0 | (3,928,000) | (65,000) |
Number of options, Expired / terminated (in shares) | 0 | 0 | 0 |
Number of options, Options outstanding, end of year (in shares) | 2,438,000 | 2,438,000 | 6,366,000 |
Number of options, Options exercisable, end of period (in shares) | 1,377,000 | 1,377,000 | 530,000 |
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 | $ 28.34 |
Weighted average exercise price, Granted (in dollars per share) | 0 | 0 | 0 |
Weighted average exercise price, Exercised (in dollars per share) | 28.58 | 4.52 | |
Weighted average exercise price, Expired / terminated (in dollars per share) | 0 | 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 | $ 189.1 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 30, 2022 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Performance shares authorized (in shares) | 0 | 0 | 0 | |||
Number of unvested options outstanding | 1,100,000 | |||||
Tax payments, for net share settlement of share based award | $ 4,870 | $ 331,309 | $ 7,809 | |||
Stock Options | ||||||
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 | $ 571,400 | $ 5,100 | ||||
Aggregate intrinsic value, Options exercisable, end of period | $ 189,100 | |||||
Number of options, Options outstanding, end of year (in shares) | 2,438,000 | 2,438,000 | 6,366,000 | |||
Weighted average exercise price (in dollars per share) | $ 28.58 | $ 28.58 | $ 28.58 | $ 28.34 | ||
Number of options exercised (in shares) | 0 | 3,928,000 | 65,000 | |||
Non-Vested Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Weighted average exercise price (in dollars per share) | $ 28.58 | |||||
Weighted average fair value (in dollars per share) | $ 35.80 | |||||
Weighted average remaining contractual life, Options outstanding, end of period | 5 years 1 month 28 days | |||||
Aggregate intrinsic value of unvested options | $ 145,700 | |||||
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) | $ 165.93 | |||||
Shares withheld, for net share settlement of share based award (in shares) | 11,000 | |||||
Tax payments, for net share settlement of share based award | $ 1,600 |
Stockholders' Equity - Summar_3
Stockholders' Equity - Summary of Stock Options Outstanding and Exercisable (Details) - $ / shares shares in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
$28.58 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Range of Exercise Price, lower limit (in dollars per share) | $ 28.58 | |||
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options outstanding (in shares) | 2,438 | 2,438 | 6,366 | 6,431 |
Weighted average exercise price (in dollars per share) | $ 28.58 | $ 28.58 | $ 28.58 | $ 28.34 |
Number of options, Options exercisable, end of period (in shares) | 1,377 | 1,377 | 530 | |
Weighted average exercise price, Options exercisable, end of period (in dollars per share) | $ 28.58 | $ 28.58 | $ 28.58 | |
Stock Options | $28.58 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options outstanding (in shares) | 1,377 | |||
Weighted average exercise price (in dollars per share) | $ 28.58 | |||
Weighted average remaining contractual life, Options outstanding, end of period | 5 years 1 month 28 days | |||
Number of options, Options exercisable, end of period (in shares) | 1,377 | |||
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 | 5 years 1 month 28 days |
Stockholders' Equity - Stock-_2
Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | $ 106,176 | $ 303,331 | $ 133,572 |
Income tax benefit | 25,154 | 30,586 | 29,329 |
Cost of product sales and service sales | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | 4,607 | 5,844 | 3,464 |
Sales, general and administrative expenses | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | 51,301 | 238,813 | 103,860 |
Research and development expenses | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense | $ 50,268 | $ 58,674 | $ 26,248 |
Stockholders' Equity - Stock In
Stockholders' Equity - Stock Incentive Plan and Stock Inducement Plan (Details) - shares | Dec. 31, 2022 | Sep. 30, 2022 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for grant (in shares) | 2,700,000 | |
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 - At-the-M
Stockholders' Equity - At-the-Market equity offering - Additional Information (Details) - ATM Offering - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Issuance of common stock (in shares) | 0 | 577,956 |
Gross proceeds | $ 107.6 | |
Net proceeds | 105.4 | |
Commissions | 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 | 2,400,000 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchase Plan (Details) - 2016 Stock Incentive Plan - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 | 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 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Accumulated other comprehensive income (loss): | |||
Beginning balance | $ 1,047,849 | $ 976,255 | $ 543,495 |
Other comprehensive income (loss) | (5,862) | (1,458) | 1,237 |
Ending balance | 1,268,491 | 1,047,849 | 976,255 |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated other comprehensive income (loss): | |||
Beginning balance | (1,317) | 141 | (1,096) |
Other comprehensive income (loss) | (5,862) | (1,458) | 1,237 |
Ending balance | (7,179) | (1,317) | 141 |
Unrealized Gains (Losses) on Available-for-Sale Investments | |||
Accumulated other comprehensive income (loss): | |||
Beginning balance | (207) | ||
Other comprehensive income (loss) | (1,044) | (207) | |
Ending balance | (1,251) | (207) | |
Foreign Currency Translation | |||
Accumulated other comprehensive income (loss): | |||
Beginning balance | (1,110) | 141 | (1,096) |
Other comprehensive income (loss) | (4,818) | (1,251) | 1,237 |
Ending balance | $ (5,928) | $ (1,110) | $ 141 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Termination period | 1 year |
Finance leases | $ 0 |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining terms | 11 years |
Leases - Balance Sheet (Details
Leases - Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Operating lease assets, other assets | $ 38,370 | $ 23,270 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent |
Current | ||
Operating lease, current liabilities | $ 6,357 | $ 6,540 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Noncurrent | ||
Operating lease, noncurrent liabilities | $ 37,143 | $ 20,440 |
Total lease liabilities | $ 43,500 | $ 26,980 |
Leases - Lease Expense (Details
Leases - Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease expense | $ 8,703 | $ 7,495 | $ 6,757 |
Sublease income | (55) | ||
Net lease expense | 8,703 | 7,495 | 6,702 |
Sales, general and administrative expenses | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease expense | 4,388 | 3,820 | 3,762 |
Research and development expenses | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease expense | $ 4,315 | $ 3,675 | $ 2,995 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow and Balance Sheet Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 9,216 | $ 7,506 |
Right-of-use assets obtained in exchange for lease liabilities: | ||
Operating leases | $ 21,815 | $ 6,726 |
Weighted average remaining lease term: | ||
Operating leases (in years) | 7 years 2 months 12 days | 4 years 2 months 12 days |
Weighted average discount rate: | ||
Operating leases (as a percentage) | 5.44% | 2.73% |
Leases - Minimum Lease Payments
Leases - Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Operating | |
2023 | $ 8,448 |
2024 | 8,936 |
2025 | 8,990 |
2026 | 5,374 |
2027 | 3,566 |
Thereafter | 20,579 |
Total minimum lease payments | 55,893 |
Less: Amount representing interest | (12,393) |
Present value of lease payments | $ 43,500 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Benefit Plans | |||
Defined contribution plan, cost | $ 10.9 | $ 7.4 | $ 5.6 |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments of company | segment | 2 | ||
Net sales | $ 1,189,935 | $ 863,381 | $ 681,003 |
Cost of sales | 461,297 | 322,471 | 264,672 |
Gross margin | 728,638 | 540,910 | 416,331 |
Research and development | 233,810 | 194,026 | 123,195 |
TASER | |||
Segment Reporting Information [Line Items] | |||
Net sales | 531,566 | 436,927 | 366,552 |
Cost of sales | 194,957 | 149,884 | 136,925 |
Gross margin | 336,609 | 287,043 | 229,627 |
Research and development | 51,607 | 46,136 | 15,380 |
Software and Sensors | |||
Segment Reporting Information [Line Items] | |||
Net sales | 658,369 | 426,454 | 314,451 |
Cost of sales | 266,340 | 172,587 | 127,747 |
Gross margin | 392,029 | 253,867 | 186,704 |
Research and development | 182,203 | 147,890 | 107,815 |
Product | |||
Segment Reporting Information [Line Items] | |||
Net sales | 801,388 | 608,525 | 500,250 |
Cost of sales | 363,219 | 260,098 | 224,131 |
Product | TASER | |||
Segment Reporting Information [Line Items] | |||
Net sales | 511,010 | 426,916 | 362,649 |
Cost of sales | 194,957 | 149,739 | 136,925 |
Product | Software and Sensors | |||
Segment Reporting Information [Line Items] | |||
Net sales | 290,378 | 181,609 | 137,601 |
Cost of sales | 168,262 | 110,359 | 87,206 |
Service | |||
Segment Reporting Information [Line Items] | |||
Net sales | 388,547 | 254,856 | 180,753 |
Cost of sales | 98,078 | 62,373 | 40,541 |
Service | TASER | |||
Segment Reporting Information [Line Items] | |||
Net sales | 20,556 | 10,011 | 3,903 |
Cost of sales | 145 | ||
Service | Software and Sensors | |||
Segment Reporting Information [Line Items] | |||
Net sales | 367,991 | 244,845 | 176,850 |
Cost of sales | $ 98,078 | $ 62,228 | $ 40,541 |
Supplemental Disclosure to Ca_3
Supplemental Disclosure to Cash Flows - Summary of Supplemental Non-Cash and Other Cash Flow Information (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Supplemental Disclosure to Cash Flows | ||||
Cash and cash equivalents | $ 353,684 | $ 356,332 | $ 155,440 | |
Restricted cash | 1,868 | 106 | 111 | |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | 355,552 | 356,438 | 155,551 | $ 172,355 |
Cash paid for income taxes, net of refunds | 10,508 | 5,108 | 10,893 | |
Non-cash transactions: | ||||
Property and equipment purchases in accounts payable | $ 1,056 | $ 1,994 | $ 878 | |
Non-cash purchase consideration related to business combinations | 3,920 |