Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 03, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-16391 | |
Entity Registrant Name | Axon Enterprise, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 86-0741227 | |
Entity Address, Address Line One | 17800 North 85th Street | |
Entity Address, City or Town | Scottsdale | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85255 | |
City Area Code | 480 | |
Local Phone Number | 991-0797 | |
Title of 12(b) Security | Common Stock, $0.00001 Par Value | |
Trading Symbol | AXON | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 74,933,831 | |
Entity Central Index Key | 0001069183 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 406,042 | $ 353,684 |
Marketable securities | 68,850 | 39,240 |
Short-term investments | 715,688 | 581,769 |
Accounts and notes receivable, net of allowance of $2,144 and $2,176 as of September 30, 2023 and December 31, 2022, respectively | 442,830 | 358,190 |
Contract assets, net | 260,523 | 196,902 |
Inventory | 260,119 | 202,471 |
Prepaid expenses and other current assets | 103,789 | 73,022 |
Total current assets | 2,257,841 | 1,805,278 |
Property and equipment, net | 186,957 | 169,843 |
Deferred tax assets, net | 213,831 | 156,866 |
Intangible assets, net | 20,324 | 12,158 |
Goodwill | 57,344 | 44,983 |
Long-term investments | 156,207 | |
Long-term notes receivable, net | 4,381 | 5,210 |
Long-term contract assets, net | 78,663 | 45,170 |
Strategic investments | 240,299 | 296,563 |
Other long-term assets | 194,543 | 159,616 |
Total assets | 3,254,183 | 2,851,894 |
Current liabilities: | ||
Accounts payable | 90,035 | 59,918 |
Accrued liabilities | 146,940 | 155,934 |
Current portion of deferred revenue | 454,891 | 360,037 |
Customer deposits | 16,469 | 20,399 |
Other current liabilities | 9,492 | 6,358 |
Total current liabilities | 717,827 | 602,646 |
Deferred revenue, net of current portion | 270,082 | 248,003 |
Liability for unrecognized tax benefits | 18,938 | 10,745 |
Long-term deferred compensation | 9,148 | 6,285 |
Deferred tax liability, net | 2,467 | 1 |
Long-term lease liabilities | 35,329 | 37,143 |
Convertible notes, net | 676,315 | 673,967 |
Other long-term liabilities | 2,960 | 4,613 |
Total liabilities | 1,733,066 | 1,583,403 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | ||
Common stock, $0.00001 par value; 200,000,000 shares authorized; 74,931,697 and 71,474,581 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 1 | 1 |
Additional paid-in capital | 1,315,954 | 1,174,594 |
Treasury stock at cost, 20,220,227 shares as of September 30, 2023 and December 31, 2022 | (155,947) | (155,947) |
Retained earnings | 373,978 | 257,022 |
Accumulated other comprehensive loss | (12,869) | (7,179) |
Total stockholders' equity | 1,521,117 | 1,268,491 |
Total liabilities and stockholders' equity | $ 3,254,183 | $ 2,851,894 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance on accounts receivable | $ 2,144 | $ 2,176 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 74,931,697 | 71,474,581 |
Common stock, shares outstanding (in shares) | 74,931,697 | 71,474,581 |
Treasury stock, shares (in shares) | 20,220,227 | 20,220,227 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net sales | $ 413,601 | $ 311,754 | $ 1,131,249 | $ 853,793 |
Cost of sales | 158,329 | 118,497 | 439,754 | 330,834 |
Gross margin | 255,272 | 193,257 | 691,495 | 522,959 |
Operating expenses: | ||||
Sales, general and administrative | 123,279 | 102,023 | 359,768 | 287,157 |
Research and development | 76,880 | 59,127 | 219,747 | 165,090 |
Total operating expenses | 200,159 | 161,150 | 579,515 | 452,247 |
Income from operations | 55,113 | 32,107 | 111,980 | 70,712 |
Interest and other income (loss), net | 14,310 | (11,249) | (12,782) | 91,076 |
Income before provision for income taxes | 69,423 | 20,858 | 99,198 | 161,788 |
Provision for (benefit from) income taxes | 10,026 | 8,727 | (17,758) | 43,824 |
Net income | $ 59,397 | $ 12,131 | $ 116,956 | $ 117,964 |
Net income per common and common equivalent shares: | ||||
Basic (in dollars per share) | $ 0.79 | $ 0.17 | $ 1.58 | $ 1.66 |
Diluted (in dollars per share) | $ 0.78 | $ 0.17 | $ 1.56 | $ 1.63 |
Weighted average number of common and common equivalent shares outstanding: | ||||
Basic (in shares) | 74,826 | 71,107 | 73,904 | 71,033 |
Diluted (in shares) | 75,952 | 72,525 | 75,212 | 72,386 |
Net income | $ 59,397 | $ 12,131 | $ 116,956 | $ 117,964 |
Foreign currency translation adjustments | (6,799) | (2,275) | (5,680) | (5,513) |
Unrealized gain (loss) on available-for-sale investments | 656 | (326) | (10) | (976) |
Comprehensive income | 53,254 | 9,530 | 111,266 | 111,475 |
Product | ||||
Net sales | 256,443 | 210,398 | 709,306 | 586,653 |
Cost of sales | 116,278 | 93,724 | 325,054 | 260,578 |
Service | ||||
Net sales | 157,158 | 101,356 | 421,943 | 267,140 |
Cost of sales | $ 42,051 | $ 24,773 | $ 114,700 | $ 70,256 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance at Dec. 31, 2021 | $ 1 | $ 1,095,229 | $ (155,947) | $ 109,883 | $ (1,317) | $ 1,047,849 |
Beginning balance (in shares) at Dec. 31, 2021 | 70,896,856 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | (70) | (70) | ||||
Issuance of common stock under employee plans, net | (1,388) | (1,388) | ||||
Issuance of common stock under employee plans, net (in shares) | 99,802 | |||||
Stock-based compensation | 25,088 | 25,088 | ||||
Net income | 54,871 | 54,871 | ||||
Other comprehensive income (loss), net | (1,561) | (1,561) | ||||
Ending balance at Mar. 31, 2022 | $ 1 | 1,118,859 | $ (155,947) | 164,754 | (2,878) | 1,124,789 |
Ending balance (in shares) at Mar. 31, 2022 | 70,996,658 | 20,220,227 | ||||
Beginning balance at Dec. 31, 2021 | $ 1 | 1,095,229 | $ (155,947) | 109,883 | (1,317) | 1,047,849 |
Beginning balance (in shares) at Dec. 31, 2021 | 70,896,856 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 117,964 | |||||
Ending balance at Sep. 30, 2022 | $ 1 | 1,167,218 | $ (155,947) | 227,847 | (7,806) | 1,231,313 |
Ending balance (in shares) at Sep. 30, 2022 | 71,151,670 | 20,220,227 | ||||
Beginning balance at Mar. 31, 2022 | $ 1 | 1,118,859 | $ (155,947) | 164,754 | (2,878) | 1,124,789 |
Beginning balance (in shares) at Mar. 31, 2022 | 70,996,658 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | (4) | (4) | ||||
Issuance of common stock under employee plans, net | (931) | (931) | ||||
Issuance of common stock under employee plans, net (in shares) | 81,041 | |||||
Stock-based compensation | 21,162 | 21,162 | ||||
Net income | 50,962 | 50,962 | ||||
Other comprehensive income (loss), net | (2,327) | (2,327) | ||||
Ending balance at Jun. 30, 2022 | $ 1 | 1,139,086 | $ (155,947) | 215,716 | (5,205) | 1,193,651 |
Ending balance (in shares) at Jun. 30, 2022 | 71,077,699 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock under employee plans, net | (72) | (72) | ||||
Issuance of common stock under employee plans, net (in shares) | 73,971 | |||||
Stock-based compensation | 28,204 | 28,204 | ||||
Net income | 12,131 | 12,131 | ||||
Other comprehensive income (loss), net | (2,601) | (2,601) | ||||
Ending balance at Sep. 30, 2022 | $ 1 | 1,167,218 | $ (155,947) | 227,847 | (7,806) | 1,231,313 |
Ending balance (in shares) at Sep. 30, 2022 | 71,151,670 | 20,220,227 | ||||
Beginning balance at Dec. 31, 2022 | $ 1 | 1,174,594 | $ (155,947) | 257,022 | (7,179) | 1,268,491 |
Beginning balance (in shares) at Dec. 31, 2022 | 71,474,581 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | 33,650 | 33,650 | ||||
Issuance of common stock (in shares) | 154,500 | |||||
Issuance of common stock under employee plans, net | (34,841) | (34,841) | ||||
Issuance of common stock under employee plans, net (in shares) | 335,629 | |||||
Stock options exercised | 54,346 | 54,346 | ||||
Stock options exercised (in shares) | 1,901,535 | |||||
Stock-based compensation | 34,350 | 34,350 | ||||
Issuance of common stock for business combination contingent consideration (in shares) | 7,817 | |||||
Net income | 45,139 | 45,139 | ||||
Other comprehensive income (loss), net | 1,860 | 1,860 | ||||
Ending balance at Mar. 31, 2023 | $ 1 | 1,262,099 | $ (155,947) | 302,161 | (5,319) | 1,402,995 |
Ending balance (in shares) at Mar. 31, 2023 | 73,874,062 | 20,220,227 | ||||
Beginning balance at Dec. 31, 2022 | $ 1 | 1,174,594 | $ (155,947) | 257,022 | (7,179) | 1,268,491 |
Beginning balance (in shares) at Dec. 31, 2022 | 71,474,581 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 116,956 | |||||
Ending balance at Sep. 30, 2023 | $ 1 | 1,315,954 | $ (155,947) | 373,978 | (12,869) | 1,521,117 |
Ending balance (in shares) at Sep. 30, 2023 | 74,931,697 | 20,220,227 | ||||
Beginning balance at Mar. 31, 2023 | $ 1 | 1,262,099 | $ (155,947) | 302,161 | (5,319) | 1,402,995 |
Beginning balance (in shares) at Mar. 31, 2023 | 73,874,062 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | 61,156 | 61,156 | ||||
Issuance of common stock (in shares) | 313,094 | |||||
Issuance of common stock under employee plans, net | (62,214) | (62,214) | ||||
Issuance of common stock under employee plans, net (in shares) | 570,357 | |||||
Stock options exercised | 157 | 157 | ||||
Stock options exercised (in shares) | 5,491 | |||||
Stock-based compensation | 31,891 | 31,891 | ||||
Net income | 12,420 | 12,420 | ||||
Other comprehensive income (loss), net | (1,407) | (1,407) | ||||
Ending balance at Jun. 30, 2023 | $ 1 | 1,293,089 | $ (155,947) | 314,581 | (6,726) | 1,444,998 |
Ending balance (in shares) at Jun. 30, 2023 | 74,763,004 | 20,220,227 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock | (101) | (101) | ||||
Issuance of common stock under employee plans, net | (7,021) | (7,021) | ||||
Issuance of common stock under employee plans, net (in shares) | 168,693 | |||||
Stock-based compensation | 29,987 | 29,987 | ||||
Net income | 59,397 | 59,397 | ||||
Other comprehensive income (loss), net | (6,143) | (6,143) | ||||
Ending balance at Sep. 30, 2023 | $ 1 | $ 1,315,954 | $ (155,947) | $ 373,978 | $ (12,869) | $ 1,521,117 |
Ending balance (in shares) at Sep. 30, 2023 | 74,931,697 | 20,220,227 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 116,956 | $ 117,964 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation | 96,228 | 74,454 |
Deferred income taxes | (53,311) | 30,349 |
Unrealized loss (gain) on strategic investments and marketable securities, net | 42,306 | (92,498) |
Depreciation and amortization | 22,587 | 18,171 |
Bond amortization | (12,071) | (61) |
Noncash lease expense | 4,890 | 4,997 |
Unrecognized tax benefits | 4,302 | 3,519 |
Amortization of debt issuance cost | 2,328 | |
Coupon interest expense | 1,073 | |
Other noncash items | (1,140) | 2,659 |
Change in assets and liabilities: | ||
Accounts and notes receivable and contract assets | (182,468) | (115,046) |
Inventory | (59,564) | (66,267) |
Prepaid expenses and other assets | (64,608) | (17,871) |
Accounts payable, accrued and other liabilities | 13,423 | 28,684 |
Deferred revenue | 118,294 | 115,187 |
Net cash provided by operating activities | 49,225 | 104,241 |
Cash flows from investing activities: | ||
Purchases of investments | (426,993) | (194,142) |
Proceeds from call, maturity, and sale of investments | 461,214 | 15,485 |
Exercise of warrants of strategic investments | (6,555) | |
Purchases of property and equipment | (35,624) | (44,218) |
Proceeds from disposal of property and equipment | 67 | 226 |
Purchases of intangible assets | (579) | (193) |
Strategic investments | (17,692) | (70,500) |
Business acquisition, net of cash acquired | (21,090) | (2,104) |
Net cash used in investing activities | (40,697) | (302,001) |
Cash flows from financing activities: | ||
Net proceeds from equity offering | 94,705 | (74) |
Proceeds from options exercised | 54,503 | |
Income and payroll tax payments for net-settled stock awards | (104,076) | (2,391) |
Net cash provided by (used in) financing activities | 45,132 | (2,465) |
Effect of exchange rate changes on cash and cash equivalents | (1,201) | (6,783) |
Net increase (decrease) in cash and cash equivalents | 52,459 | (207,008) |
Cash and cash equivalents and restricted cash, beginning of period | 355,552 | 356,438 |
Cash and cash equivalents and restricted cash, end of period | $ 408,011 | $ 149,430 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Supplemental disclosures: | ||
Cash and cash equivalents | $ 406,042 | $ 147,711 |
Restricted cash (Note 1) | 1,969 | 1,719 |
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | 408,011 | 149,430 |
Cash paid for income taxes, net of refunds | 47,689 | 7,503 |
Non-cash transactions | ||
Property and equipment purchases in accounts payable and accrued liabilities | $ 1,784 | $ 1,244 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | Note 1 - Organization and Summary of Significant Accounting Policies Axon Enterprise, Inc. (“Axon”, the “Company”, “we”, or “us”) is a market-leading provider of law enforcement technology solutions. Our mission is to protect life in service of promoting peace, justice and strong institutions. Our headquarters in Scottsdale, Arizona houses our executive management, sales, marketing, certain engineering, manufacturing, finance and other administrative support functions. Our global software hub is located in Seattle, Washington, and we also have subsidiaries and / or offices located in Australia, Belgium, Canada, Finland, France, Germany, Hong Kong, India, Italy, the Netherlands, Spain, the United Kingdom, and Vietnam. The accompanying unaudited condensed consolidated financial statements include the accounts of Axon Enterprise, Inc. and our subsidiaries. All material intercompany accounts, transactions, and profits have been eliminated. Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2022, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit 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. The Company believes that estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from those estimates. Segment Information Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the “Software and Sensors” segment); and the manufacture and sale of conducted electrical devices (“CEDs”), batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker (“CODM”). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 15. Geographic Information and Major Customers / Suppliers For the three and nine months ended September 30, 2023, no individual country outside the United States represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three and nine months ended September 30, 2023, no customer represented more than 10% of total net sales. At September 30, 2023 and December 31, 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the United States, China, Republic of Korea, Malaysia, Mexico, Sri Lanka, Taiwan, and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have previously experienced supply chain disruptions relating to materials and port constraints, we continue to manage potential logistical interruptions. We remain focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers. Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock options and unvested restricted stock units (“RSUs”). The effects of outstanding stock options, unvested RSUs, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 59,397 $ 12,131 $ 116,956 $ 117,964 Denominator: Weighted average shares outstanding 74,826 71,107 73,904 71,033 Dilutive effect of stock-based awards 1,126 1,418 1,308 1,353 Diluted weighted average shares outstanding 75,952 72,525 75,212 72,386 Net income per common share: Basic $ 0.79 $ 0.17 $ 1.58 $ 1.66 Diluted $ 0.78 $ 0.17 $ 1.56 $ 1.63 Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock-based awards 481 2,977 470 2,952 2027 Notes 3,017 — 3,017 — 2027 Warrants 3,017 — 3,017 — Total potentially dilutive securities 6,515 2,977 6,504 2,952 For additional information regarding our 2027 Notes, refer to Note 9. Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (901) (1,988) Warranty expense 3,381 161 Balance, end of period $ 3,291 $ 995 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 September 30, 2023 comprised money market funds, commercial paper, corporate bonds, term deposits, U.S. government bonds, agency bonds, U.S. Treasury bills, and U.S. Treasury Inflation-Protected Securities Cash equivalents and investments at December 31, 2022 also included municipal bonds and certificates of deposit . We have an investment in marketable securities, for which c hanges in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income (loss), net. We have strategic investments in eight unconsolidated affiliates as of September 30, 2023. The estimated fair value of the investments was determined based on Level 3 inputs. In determining the estimated fair value of our strategic investments in privately held companies, we utilize observable data available to us as discussed further in Note 6. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at September 30, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the condensed consolidated balance sheet. Restricted Cash Restricted cash balance as of September 30, 2023 was $2.0 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.9 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder was $1.9 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder in other long-term assets. Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and changes in circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such events and changes in circumstances could include, but are not limited to, a change in our product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications are not material and had no effect on the reported results of operations. |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2023 | |
Revenues. | |
Revenues | Note 2 - Revenues Nature of Products and Services The following tables present our revenues by primary product and service offering (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 86,718 $ — $ 86,718 $ 80,146 $ — $ 80,146 Cartridges 54,279 — 54,279 46,475 — 46,475 Axon Evidence and Cloud Services 8,975 150,563 159,538 5,125 96,814 101,939 Extended Warranties 8,078 16,054 24,132 7,290 14,511 21,801 Axon Body Cameras and Accessories — 52,488 52,488 — 40,944 40,944 Axon Fleet Systems — 26,716 26,716 — 10,139 10,139 Other (1) (2) 4,520 5,210 9,730 5,847 4,463 10,310 Total $ 162,570 $ 251,031 $ 413,601 $ 144,883 $ 166,871 $ 311,754 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 239,165 — $ 239,165 $ 213,623 $ — $ 213,623 Cartridges 149,504 — 149,504 134,145 — 134,145 Axon Evidence and Cloud Services 24,670 400,979 425,649 11,862 258,664 270,526 Extended Warranties 23,463 45,305 68,768 21,428 36,070 57,498 Axon Body Cameras and Accessories — 124,066 124,066 — 113,399 113,399 Axon Fleet Systems — 95,648 95,648 — 39,840 39,840 Other (1) (2) 14,460 13,989 28,449 13,771 10,991 24,762 Total $ 451,262 $ 679,987 $ 1,131,249 $ 394,829 $ 458,964 853,793 (1) TASER segment “Other” includes smaller categories, such as Virtual Reality (“VR”) hardware, weapons training revenue such as revenue associated with our Master Instructor School, and TASER consumer device sales. (2) Software and Sensors segment “Other” includes revenue from items including Signal Sidearm, Interview Room and Axon Air. The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 342,090 83 % $ 264,644 85 % $ 954,949 84 % $ 707,304 83 % Other countries 71,511 17 47,110 15 176,300 16 146,489 17 Total $ 413,601 100 % $ 311,754 100 % $ 1,131,249 100 % $ 853,793 100 % Contract Balances The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the nine months ended September 30, 2023 (in thousands): September 30, 2023 Contract assets, net $ 339,186 Contract liabilities (deferred revenue) 724,973 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 279,223 Contract liabilities (deferred revenue) consisted of the following (in thousands): September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Extended Warranty: TASER $ 12,500 $ 16,748 $ 29,248 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 31,569 18,524 50,093 26,229 15,338 41,567 44,069 35,272 79,341 40,436 32,956 73,392 Hardware: TASER 28,908 29,056 57,964 49,361 12,640 62,001 Software and Sensors 77,207 109,573 186,780 50,426 109,227 159,653 106,115 138,629 244,744 99,787 121,867 221,654 Services: TASER 11,104 6,549 17,653 7,637 9,501 17,138 Software and Sensors 293,603 89,632 383,235 212,177 83,679 295,856 304,707 96,181 400,888 219,814 93,180 312,994 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040 September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 52,512 $ 52,353 $ 104,865 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 402,379 217,729 620,108 288,832 208,244 497,076 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040 Remaining Performance Obligations As of September 30, 2023, we had approximately $5.8 billion of remaining performance obligations, which included both recognized contract liabilities as well as amounts that will be invoiced and recognized in future periods. The remaining performance obligations are limited only to arrangements that meet the definition of a contract under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, as of September 30, 2023. We expect to recognize between 15% - 25% of this balance over the next 12 months, and generally expect the remainder to be recognized over the following ten years, subject to risks related to delayed deployments, budget appropriation or other contract cancellation clauses. |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 9 Months Ended |
Sep. 30, 2023 | |
Cash, Cash Equivalents and Investments | |
Cash, Cash Equivalents and Investments | Note 3 - Cash, Cash Equivalents and Investments The following tables summarize our cash, cash equivalents, marketable securities, and available-for-sale investments at September 30, 2023 and December 31, 2022 (in thousands): As of September 30, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 224,437 $ — $ — $ 224,437 $ 224,437 $ — $ — $ — Level 1: Money market funds 25,292 — — 25,292 25,292 — — — Agency bonds 170,838 17 (347) 170,508 33,500 — 137,008 — Treasury bills 133,779 20 — 133,799 122,813 — 10,986 — Marketable securities 90,000 — (21,150) 68,850 — 68,850 — — Subtotal 419,909 37 (21,497) 398,449 181,605 68,850 147,994 — Level 2: Term deposits 203,205 — — 203,205 — — 203,205 — Corporate bonds 121,071 8 (559) 120,520 — — 120,520 — U.S. government 176,371 — (700) 175,671 — — 175,671 — Treasury Inflation-Protected Securities 2,606 — (11) 2,595 — — 2,595 — Commercial paper 65,703 — — 65,703 — — 65,703 — Subtotal 568,956 8 (1,270) 567,694 — — 567,694 — Total $ 1,213,302 $ 45 $ (22,767) $ 1,190,580 $ 406,042 $ 68,850 $ 715,688 $ — As of September 30, 2023, we had $390.4 million of available-for-sale investments with unrealized losses. Of the $390.4 million of available-for-sale investments with unrealized losses, $27.0 million has been in a continuous unrealized loss position for twelve months or longer, with total gross unrealized losses of $0.3 million. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. During the year ended December 31, 2021, we acquired 9.0 million shares of common stock of Cellebrite DI Ltd (“CLBT”) with a fair value of $90.0 million. The CLBT common stock is recorded as marketable securities in the accompanying condensed consolidated balance sheets and its fair value is adjusted every reporting period. Changes in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income (loss), net. During the three and nine months ended September 30, 2023, we recorded an unrealized gain on marketable securities of $4.1 million and $29.6 million, respectively, relating to CLBT. As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. government 30,525 — (159) 30,366 — — 30,366 — Treasury Inflation-Protected Securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207 |
Expected Credit Losses
Expected Credit Losses | 9 Months Ended |
Sep. 30, 2023 | |
Expected Credit Losses | |
Expected Credit Losses | Note 4 - Expected Credit Losses We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable, contract assets, notes receivable, and off-balance-sheet exposures is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the current status of customers’ trade accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Our monitoring activities include account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. The following table provides a roll-forward of the allowance for expected credit losses for finance receivables and off-balance-sheet exposures. The expected credit losses for receivables is deducted from the amortized cost basis of accounts receivable, contract assets, and notes receivable to present the net amount expected to be collected (in thousands): Nine Months Ended September 30, 2023 United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 Provision for expected credit losses 733 146 879 Amounts written off charged against the allowance (719) (105) (824) Other, including foreign currency translation — 8 8 Balance, end of period (1) $ 3,078 $ 615 $ 3,693 (1) Ending balance includes allowance for credit losses recorded in Other current liabilities on the Consolidated Balance Sheet which is related to off-balance-sheet credit exposurse. September 30, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,144 $ 2,176 Contract assets, net 1,476 1,360 Long-term notes receivable, net of current portion 59 94 Other current liabilities 14 — Total allowance for expected credit losses on customer receivables $ 3,693 $ 3,630 |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2023 | |
Inventory | |
Inventory | Note 5 - Inventory Inventories are stated at the lower of cost, determined on the first-in, first-out (“FIFO”) basis, or net realizable value, net of an inventory valuation allowance. We use a standard cost methodology to determine the cost basis for 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 goods sold based upon inventory turnover. We evaluate inventory on a quarterly basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Additional provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. Inventory consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Raw materials $ 104,372 $ 72,740 Finished goods 155,747 129,731 Total inventory $ 260,119 $ 202,471 |
Strategic Investments
Strategic Investments | 9 Months Ended |
Sep. 30, 2023 | |
Strategic Investments | |
Strategic Investments | Note 6 - Strategic Investments Strategic investments include investments in a number of non-public technology-driven companies. We account for strategic investments under the ASC 321 measurement alternative for equity securities without readily determinable fair values, as there are no quoted market prices for the investments. The investments are measured at cost less impairment, adjusted for observable price changes and are assessed for impairment whenever events or changes in circumstances indicate that the fair value may be less than its carrying value. In conjunction with certain of our strategic investments, we have the ability to commit additional capital over time through warrants and call options; for some investments, the exercisability and exercise prices are conditional on the achievement of certain performance metrics. The following tables provide a roll-forward of the balance of strategic investments (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 215,945 $ 459 $ 17,233 $ 233,637 $ 264,156 $ 1,195 16,340 $ 281,691 Investments 4,099 1,176 — 5,275 8,004 459 893 9,356 Fair value adjustments: Unrealized losses and impairments — (113) — (113) (718) — — (718) Exercises 1,500 — — 1,500 — — — — Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 — $ 83,520 Investments 15,016 1,176 — 16,192 53,164 459 17,233 70,856 Fair value adjustments: Unrealized gains — — — — 41,893 28,539 — 70,432 Unrealized losses and impairments (72,648) (1,308) — (73,956) (1,109) — — (1,109) Exercises 1,500 — — 1,500 96,719 (30,089) — 66,630 Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Inception to date Strategic investments Warrants Call options Total Investments $ 124,498 $ 4,222 $ 17,233 $ 145,953 Fair value adjustments: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses and impairments (73,756) (1,684) — (75,440) Exercises 98,219 (30,089) — 68,130 Sales (14,546) — — (14,546) Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 An unrealized impairment loss of $73.8 million related to our strategic investment and related warrants was recorded in interest and other income (loss), net on our condensed consolidated statement of operations during the nine months ended September 30, 2023. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2023 | |
Variable Interest Entities | |
Variable Interest Entities | Note 7 - Variable Interest Entities We evaluate our investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If we conclude that an investee is a VIE, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a VIE, we consolidate such entity and reflect the non-controlling interest of other beneficiaries of that entity. ● The VIE’s purpose, design, and risks the VIE was designed to create and pass through to its variable interest holders; ● The VIE’s capital structure; ● The terms between the VIE and its variable interest holders and other parties involved with the VIE; and ● Related-party affiliations. The table below presents a summary of the unconsolidated VIEs in which we hold variable interests: September 30, 2023 December 31, 2022 Total unconsolidated variable interest entities: Carrying value of variable interest - assets $ 13,016 $ 11,530 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 13,016 11,530 Total $ 13,016 $ 11,530 (1) In the table above: ● The nature of our variable interest is described in the row under maximum exposure to loss. ● Our exposure to the obligations of the VIE is limited to our interest in the entity. The primary purpose of our U.S-based, unconsolidated VIE investments is to create strategic partnerships with market-leading providers of law enforcement technology solutions. We present all variable interests in unconsolidated VIEs as strategic investments within the long-term assets section of the condensed consolidated balance sheet. We have provided financial support to the unconsolidated VIEs in exchange for preferred equity as well as warrants and call options that give us the ability to commit additional capital over time. Financial support provided to the unconsolidated 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 September 30, 2023 and December 31, 2022. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Liabilities | |
Accrued Liabilities | Note 8 - Accrued Liabilities September 30, 2023 December 31, 2022 Accrued salaries, commissions, benefits and bonus $ 92,437 $ 97,882 Accrued professional, consulting and lobbying fees 6,102 3,861 Accrued warranty expense 3,291 811 Accrued income and other taxes 3,358 13,559 Accrued inventory in transit 11,847 10,548 Other accrued expenses 29,905 29,273 Accrued liabilities $ 146,940 $ 155,934 |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Sep. 30, 2023 | |
Convertible Senior Notes | |
Convertible Senior Notes | Note 9 – Convertible Senior Notes 2027 Notes September 30, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (13,685) (16,033) Convertible notes carrying amount, net $ 676,315 $ 673,967 September 30, 2023 December 31, 2022 2027 Notes $ 738.4 $ 687.3 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Contractual interest expense $ 863 $ 2,588 Amortization of debt issuance costs 797 2,328 Total interest expense $ 1,660 $ 4,916 Note Hedge Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 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 September 30, 2023, 3,016,680 shares remain subject to the Note Hedge. Note Warrants Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028 Separately, we entered into warrant transactions with certain investment banks, whereby we sold warrants to acquire, subject to adjustment, the number of shares of our common stock shown in the table above. If the average market value per share of our common stock, on each expiration date exceeds the strike price of the Warrants expiring on that day, such Warrants would have a dilutive effect on our earnings per share to the extent we report net income. According to the terms of the Warrants, the Warrants will be automatically exercised over a 60 -trading day period beginning on the first expiration date as set forth above. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Taxes | |
Income Taxes | Note 10 - Income Taxes We file income tax returns for federal purposes and in many states, as well as in multiple foreign jurisdictions. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three to four years, but can be up to ten years in some jurisdictions following the tax year to which these filings relate. Deferred Tax Assets Net deferred income tax assets at September 30, 2023, primarily include R&D capitalization net of amortization, deferred revenue, convertible debt net of amortization, accruals and reserves, and stock-based compensation expense partially offset by accelerated depreciation expense and valuation allowance reserve. Our total net deferred tax assets at September 30, 2023 were $211.4 million. In preparing our condensed consolidated financial statements, management assesses the likelihood that its deferred tax assets will be realized from future taxable income. In evaluating our ability to recover our deferred income tax assets, management considers all available positive and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction by jurisdiction basis. A valuation allowance is established if it is determined that it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Management exercises significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets. As of September 30, 2023, management continues to believe the positive evidence from projected future earnings outweighs the negative evidence and a valuation allowance is only needed on specific deferred tax assets. We have concluded that a valuation allowance is necessary against unrealized investment losses as well as transaction costs incurred in connection with certain investments. Additionally, we do have Arizona R&D tax credits expiring unutilized each year; therefore, management has concluded that it is more likely than not that our Arizona R&D deferred tax asset will not be realized, and a valuation allowance has been recorded against this net asset. In Australia, we have determined that sufficient deferred tax liabilities will reverse in order to realize all assets except one long-lived intangible where there is not an expectation that the asset may be realized. Therefore, we continue to recognize a partial valuation allowance for Australia. We complete R&D tax credit studies for each year that an R&D tax credit is claimed for federal and state income tax purposes. Management has made the determination that it is more likely than not that the full benefit of the R&D tax credit will not be sustained on examination and recorded a liability for unrecognized tax benefits of $25.6 million as of September 30, 2023. Should the unrecognized benefit of $25.6 million be recognized, our effective tax rate would be favorably impacted. Approximately $5.5 million of the unrecognized tax benefit associated with R&D credits has been netted against the R&D deferred tax asset. Effective Tax Rate Our overall effective tax rate for the nine months ended September 30, 2023, after discrete period adjustments, was (17.9%). Before discrete adjustments, the estimated annual effective tax rate was 17.4%, which differs from the federal statutory rate, primarily due to the impact of R&D tax credits and a decrease in valuation allowance offset by the executive compensation limitation under Internal Revenue Code (“IRC”) Section 162(m) and an increase in unrecognized tax benefits, on projected pre-tax income for the year. The effective tax rate was favorably impacted by a $36.8 million discrete tax benefit primarily associated with net windfalls related to stock-based compensation for RSUs and performance stock units (“PSUs”) that vested during the nine months ended September 30, 2023, primarily attributed to the vesting of the final three tranches of eXponential Stock Performance Plan (“XSPP”) in March and May 2023. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | Note 11 - Stockholders’ Equity CEO Performance Award On May 24, 2018, our stockholders approved the Board of Directors’ grant of 6,365,856 stock options to Patrick W. Smith, our Chief Executive Officer (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 Chief Executive Officer or as both Executive Chairman and Chief Product Officer and service through each attainment date. As of September 30, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee of the Board of Directors (the “Compensation Committee”). As a result, 6.4 million stock options have been certified by the Compensation Committee and vested. As all 12 operational goals have been achieved, we recorded stock-based compensation expense of $246.0 million related to the CEO Performance Award. No stock-based compensation expense was recorded related to the CEO Performance Award for the three months ended September 30, 2023. eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the Axon Enterprise, Inc. 2019 Stock Incentive Plan (the “2019 Plan”), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our XSPP and grants of eXponential Stock Units (“XSUs”) under the 2019 Plan. As of September 30, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. We recorded stock-based compensation expense of $199.4 million related to the XSU awards from their respective grant dates through September 30, 2023. As of September 30, 2023, we had $0.5 million of total unrecognized stock-based compensation expense, which will be recognized over a weighted-average period of 0.2 years. The unrecognized expense is related to certain awards that have not yet vested due to their minimum service requirement. Restricted Stock Units The following table summarizes RSU activity for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,565 $ 145.38 Granted 464 203.71 Released (371) 118.04 Forfeited (104) 155.25 Units outstanding, end of period 1,554 168.67 $ 309,283 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $198.99 per share, multiplied by the number of RSUs outstanding. As of September 30, 2023, there was $193.8 million in unrecognized compensation costs related to RSUs under our stock plans for awards that are expected to vest. We expect to recognize the cost related to the RSUs over a weighted average period of 2.1 years. RSUs are released when vesting requirements are met. Certain RSUs that vested in the nine months ended September 30, 2023 were net-share settled such that we withheld shares to cover the employees’ tax obligations for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to RSUs were approximately 17,000 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 condensed consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital. Performance Stock Units The following table summarizes PSU activity, inclusive of XSUs, for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,369 $ 43.43 Granted 171 187.74 Released (1,222) 36.60 Forfeited (43) 27.52 Units outstanding, end of period 275 166.05 $ 54,768 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $198.99 per share, multiplied by the number of PSUs outstanding. As of September 30, 2023, there was $22.6 million in unrecognized compensation costs related to PSUs under our stock plans for awards that are expected to vest. We expect to recognize the cost related to the PSUs over a weighted average period of 4.8 years. PSUs are released when vesting requirements are met. Certain PSUs that vested in the nine months ended September 30, 2023 were net-share settled such that we withheld shares to cover the employees’ tax obligations for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to PSUs were 0.5 million and had a value of $100.8 million on their respective vesting dates as determined by the closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the condensed consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital. Stock Option Activity The following table summarizes stock option activity for the nine months ended September 30, 2023 (number of options and aggregate intrinsic value in thousands): Weighted Weighted Average Number Average Remaining of Exercise Contractual Aggregate Options Price Life (years) Intrinsic Value Options outstanding, beginning of year 2,438 $ 28.58 Granted — — Exercised (1,907) 28.58 Expired / terminated — — Options outstanding and exercisable, end of period 531 28.58 4.41 $ 90,476 Aggregate intrinsic value represents the difference between the exercise price of the underlying stock options and the closing stock price on the last trading day of the period ended September 30, 2023, which was $198.99. Of the total stock options exercised during the nine months ended September 30, 2023, 0.9 million shares were immediately sold to cover the exercise price and the option holder’s tax obligation for the applicable income and other employment taxes. Stock-based Compensation Expense The following table summarizes the composition of stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of product sales and service sales $ 1,687 $ 1,157 $ 4,685 $ 3,331 Sales, general and administrative expenses 12,886 14,268 43,232 35,860 Research and development expenses 15,414 12,779 48,311 35,263 Total stock-based compensation expense $ 29,987 $ 28,204 $ 96,228 $ 74,454 Stock Incentive Plan In May 2022, our shareholders approved the Axon Enterprise, Inc. 2022 Stock Incentive Plan (the “2022 Plan”) authorizing an additional 2.5 million shares, plus remaining available shares under prior plans, for issuance under the new plan. Combined with our 2019 Plan and other legacy stock incentive plans, there are 2.3 million shares available for grant as of September 30, 2023. Stock Repurchase Plan In February 2016, our Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of our outstanding common stock subject to stock market conditions and corporate considerations. During the nine months ended September 30, 2023 and 2022, no common shares were purchased under the program. As of September 30, 2023, $16.3 million remains available under the plan for future purchases. Any future purchases will be discretionary. At-the-Market equity offering During the nine months ended September 30, 2023, we sold 467,594 shares of our common stock under our “at-the-market” equity offering program (the “ATM”). We generated approximately $96.4 million in aggregate gross proceeds from sales under the ATM. Aggregate net proceeds from the ATM were $94.7 million after deducting related expenses, including commissions to the sales agent and issuance costs of $1.7 million. We may sell up to a total of 3.0 million shares of our common stock under the ATM, with 2.0 million shares remaining as of September 30, 2023 |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2023 | |
Line of Credit. | |
Line of Credit | Note 12 - Line of Credit In December 2022, we entered into a credit agreement that provides for a senior unsecured multi-currency revolving credit facility in an aggregate principal amount of up to $200.0 million, $30.0 million of which is available for the issuance of letters of credit. The credit agreement will mature on the earlier of December 15, 2027 or the date that is six months prior to the stated maturity date of the 2027 Notes unless the 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, in each lender’s sole discretion. At September 30, 2023 and December 31, 2022, there were no borrowings under the line. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit. As of September 30, 2023 we had letters of credit outstanding of approximately $7.4 million under the facility and available borrowing of $192.6 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at Term SOFR plus 1.25 to 1.75% per year determined in accordance with a pricing grid based on our net debt to earnings before interest expense, taxes, depreciation and amortization (“EBITDA”) ratio, which for the purposes of the credit agreement excludes investment interest income. “SOFR” is defined as a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York or a successor administrator of the secured overnight financing rate. We are required to comply with a net leverage ratio, defined as consolidated total indebtedness to EBITDA, of no greater than 3.50 to 1.00 based upon a trailing four fiscal quarter period. At September 30, 2023, our net leverage ratio was 0.27 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 period. We are compliant with the consolidated interest coverage ratio, which is not meaningful for the period ended September 30, 2023. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 13 - Commitments and Contingencies Product Litigation As a manufacturer of weapons and other law enforcement tools used in high-risk field environments, we are often the subject of products liability litigation concerning the use of our products. We are currently named as a defendant in four lawsuits in which the plaintiffs allege either wrongful death or personal injury in situations in which a TASER CED was used by law enforcement officers in connection with arrests or training. While the facts vary from case to case, these product liability claims typically allege defective product design, manufacturing, and/or failure to warn. They seek compensatory and sometimes punitive damages, often in unspecified amounts. We continue to aggressively defend all product litigation. As a general rule, it is our policy not to settle suspect injury or death cases. Exceptions are sometimes made where the settlement is strategically beneficial to us. Due to the confidential nature of our litigation strategy and the confidentiality agreements that are executed in the event of a settlement, we do not identify or comment on specific settlements by case or amount. Based on current information, we do not believe that the outcome of any such legal proceeding will have a material effect on our financial position, results of operations, or cash flows. We are self-insured for the first $5.0 million of any product claim made after 2014. No judgment or settlement has ever exceeded this amount in any products case. We continue to maintain product liability insurance coverage, including an insurance policy fronting arrangement, above our self-insured retention with various limits depending on the policy period. U.S. Federal Trade Commission Litigation In January 2020, the U.S. Federal Trade Commission (“FTC”) filed an administrative enforcement action regarding our May 2018 acquisition of an insolvent body worn camera competitor, Vievu LLC (“Vievu”). The FTC alleged the merger was anticompetitive and adversely affected the body worn camera and digital evidence management market for “large metropolitan police departments,” which we strongly denied. We sued the FTC in federal court challenging the FTC’s structure as unconstitutional. In April of this year, the Supreme Court unanimously held that Axon’s “existential” claims could proceed in federal court, and in August we filed our amended complaint in the District of Arizona. On October 6, 2023, the FTC unilaterally dismissed its administrative complaint against Axon without consent decree or other condition. We therefore dismissed our federal court claims as moot on October 10, 2023 ending this five-year dispute. In August 2023, the Township of Howell (NJ) filed a purported class action in the District of New Jersey alleging Sherman and Clayton Act violations, relying heavily on the now dismissed FTC allegations concerning the Vievu acquisition. Howell also sued Safariland LLC, which sold Vievu to Axon, alleging a companion holster supply agreement for TASER energy weapons impermissibly restrained trade, which we deny. Subsequently, the City of Baltimore (MD) and the City of Augusta (ME) filed suits making similar antitrust allegations. Axon will vigorously defend these actions, which are in the process of being consolidated. General From time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. After carefully assessing the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed reasonably possible but not probable, we determine whether it is possible to provide an estimate of the Based on our assessment of outstanding litigation and claims as of the date of these financial statements, we have determined that it is not reasonably probable that these lawsuits will individually, or in the aggregate, materially affect our results of operations, financial condition or cash flows. However, the outcome of any litigation is inherently uncertain and there can be no assurance that any expense, liability or damages that may ultimately result from the resolution of these matters will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage and will not have a material adverse effect on our operating results, financial condition or cash flows. Off-Balance Sheet Arrangements Under certain circumstances, we use letters of credit and surety bonds to guarantee our performance under various contracts, principally in connection with the installation and integration of Axon cameras and related technologies. Certain of our letters of credit and surety bonds have stated expiration dates with others being released as the contractual performance terms are completed. At September 30, 2023, we had outstanding letters of credit issued under our credit facility of $7.4 million that are expected to expire throughout 2023 and 2024. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss). | |
Accumulated Other Comprehensive Income (Loss) | Note 14 – Accumulated Other Comprehensive Income (Loss) The following tables reflect the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2022 $ (1,251) (5,928) $ (7,179) Other comprehensive income 184 1,676 1,860 Balance, March 31, 2023 $ (1,067) $ (4,252) $ (5,319) Other comprehensive loss (850) (557) (1,407) Balance, June 30, 2023 $ (1,917) $ (4,809) $ (6,726) Other comprehensive income (loss) 656 (6,799) (6,143) Balance, September 30, 2023 $ (1,261) $ (11,608) $ (12,869) Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (489) (1,072) (1,561) Balance, March 31, 2022 $ (696) $ (2,182) $ (2,878) Other comprehensive loss (161) (2,166) (2,327) Balance, June 30, 2022 $ (857) $ (4,348) $ (5,205) Other comprehensive loss (326) (2,275) (2,601) Balance, September 30, 2022 $ (1,183) $ (6,623) $ (7,806) |
Segment Data
Segment Data | 9 Months Ended |
Sep. 30, 2023 | |
Segment Data | |
Segment Data | Note 15 - Segment Data Our operations comprise two reportable segments: the TASER segment and the Software and Sensors segment. Information relative to our reportable segments was as follows (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 153,375 $ 103,068 $ 256,443 $ 139,267 $ 71,131 $ 210,398 Net sales from services 9,195 147,963 157,158 5,616 95,740 101,356 Net sales 162,570 251,031 413,601 144,883 166,871 311,754 Cost of product sales 59,746 56,532 116,278 53,422 40,302 93,724 Cost of service sales 1,252 40,799 42,051 — 24,773 24,773 Cost of sales 60,998 97,331 158,329 53,422 65,075 118,497 Gross margin $ 101,572 $ 153,700 $ 255,272 $ 91,461 $ 101,796 $ 193,257 Research and development $ 15,672 $ 61,208 $ 76,880 $ 13,864 $ 45,263 $ 59,127 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 426,372 $ 282,934 $ 709,306 $ 382,142 $ 204,511 $ 586,653 Net sales from services 24,890 397,053 421,943 12,687 254,453 267,140 Net sales 451,262 679,987 1,131,249 394,829 458,964 853,793 Cost of product sales 170,297 154,757 325,054 142,510 118,068 260,578 Cost of service sales 2,517 112,183 114,700 — 70,256 70,256 Cost of sales 172,814 266,940 439,754 142,510 188,324 330,834 Gross margin $ 278,448 $ 413,047 $ 691,495 $ 252,319 $ 270,640 $ 522,959 Research and development $ 46,128 $ 173,619 $ 219,747 $ 37,076 $ 128,014 $ 165,090 |
Business Acquisition
Business Acquisition | 9 Months Ended |
Sep. 30, 2023 | |
Business Acquisition | |
Business Acquisition | Note 16 – Business Acquisition During the nine months ended September 30, 2023, we completed an acquisition for total purchase consideration of $23.9 million. The purchase price included $2.2 million of contingent cash consideration, which is expected to be earned by the sellers upon meeting specified targets by July 1, 2027. Total transaction costs related to the acquisition were $1.7 million for the nine months ended September 30, 2023. These transaction costs were expensed as incurred in sales, general and administrative (“SG&A”) expenses in our condensed consolidated statements of operations. The purchase price allocation is subject to revision during the measurement period pending final asset valuation procedures and related calculations. Based on the purchase price allocation, we recorded $12.9 million of goodwill, $11.5 million of identifiable intangible assets, and $2.3 million in net tangible assets, excluding deferred taxes. We acquired a net deferred tax liability of $2.8 million. The goodwill generated from the acquisition is primarily attributable to synergies that are expected to be achieved from the integration of the business and is not deductible for tax purposes. We have assigned the goodwill to the Software and Sensors segment. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2022, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit 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. The Company believes that estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from those estimates. |
Segment Information | Segment Information Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the “Software and Sensors” segment); and the manufacture and sale of conducted electrical devices (“CEDs”), batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer who is our chief operating decision maker (“CODM”). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually. Additional information related to our business segments is summarized in Note 15. |
Geographic Information and Major Customers / Suppliers | Geographic Information and Major Customers / Suppliers For the three and nine months ended September 30, 2023, no individual country outside the United States represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three and nine months ended September 30, 2023, no customer represented more than 10% of total net sales. At September 30, 2023 and December 31, 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the United States, China, Republic of Korea, Malaysia, Mexico, Sri Lanka, Taiwan, and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have previously experienced supply chain disruptions relating to materials and port constraints, we continue to manage potential logistical interruptions. We remain focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers. |
Income per Common Share | Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock options and unvested restricted stock units (“RSUs”). The effects of outstanding stock options, unvested RSUs, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 59,397 $ 12,131 $ 116,956 $ 117,964 Denominator: Weighted average shares outstanding 74,826 71,107 73,904 71,033 Dilutive effect of stock-based awards 1,126 1,418 1,308 1,353 Diluted weighted average shares outstanding 75,952 72,525 75,212 72,386 Net income per common share: Basic $ 0.79 $ 0.17 $ 1.58 $ 1.66 Diluted $ 0.78 $ 0.17 $ 1.56 $ 1.63 Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock-based awards 481 2,977 470 2,952 2027 Notes 3,017 — 3,017 — 2027 Warrants 3,017 — 3,017 — Total potentially dilutive securities 6,515 2,977 6,504 2,952 For additional information regarding our 2027 Notes, refer to Note 9. |
Standard Warranties | Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (901) (1,988) Warranty expense 3,381 161 Balance, end of period $ 3,291 $ 995 |
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 September 30, 2023 comprised money market funds, commercial paper, corporate bonds, term deposits, U.S. government bonds, agency bonds, U.S. Treasury bills, and U.S. Treasury Inflation-Protected Securities Cash equivalents and investments at December 31, 2022 also included municipal bonds and certificates of deposit . We have an investment in marketable securities, for which c hanges in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income (loss), net. We have strategic investments in eight unconsolidated affiliates as of September 30, 2023. The estimated fair value of the investments was determined based on Level 3 inputs. In determining the estimated fair value of our strategic investments in privately held companies, we utilize observable data available to us as discussed further in Note 6. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at September 30, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the condensed consolidated balance sheet. |
Restricted Cash | Restricted Cash Restricted cash balance as of September 30, 2023 was $2.0 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.9 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder was $1.9 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder in other long-term assets. |
Valuation of Goodwill, Intangibles and Long-lived Assets | Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and changes in circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such events and changes in circumstances could include, but are not limited to, a change in our product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications are not material and had no effect on the reported results of operations. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization and Summary of Significant Accounting Policies | |
Schedule of weighted average number of shares outstanding and earnings per share | The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 59,397 $ 12,131 $ 116,956 $ 117,964 Denominator: Weighted average shares outstanding 74,826 71,107 73,904 71,033 Dilutive effect of stock-based awards 1,126 1,418 1,308 1,353 Diluted weighted average shares outstanding 75,952 72,525 75,212 72,386 Net income per common share: Basic $ 0.79 $ 0.17 $ 1.58 $ 1.66 Diluted $ 0.78 $ 0.17 $ 1.56 $ 1.63 |
Schedule of potentially dilutive securities excluded in calculation of diluted net income per share | Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock-based awards 481 2,977 470 2,952 2027 Notes 3,017 — 3,017 — 2027 Warrants 3,017 — 3,017 — Total potentially dilutive securities 6,515 2,977 6,504 2,952 |
Summary of changes in our estimated warranty reserve | Changes in our estimated product warranty liabilities were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (901) (1,988) Warranty expense 3,381 161 Balance, end of period $ 3,291 $ 995 |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenues. | |
Summary of Revenue by Product and Service Offering and Geography | The following tables present our revenues by primary product and service offering (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 86,718 $ — $ 86,718 $ 80,146 $ — $ 80,146 Cartridges 54,279 — 54,279 46,475 — 46,475 Axon Evidence and Cloud Services 8,975 150,563 159,538 5,125 96,814 101,939 Extended Warranties 8,078 16,054 24,132 7,290 14,511 21,801 Axon Body Cameras and Accessories — 52,488 52,488 — 40,944 40,944 Axon Fleet Systems — 26,716 26,716 — 10,139 10,139 Other (1) (2) 4,520 5,210 9,730 5,847 4,463 10,310 Total $ 162,570 $ 251,031 $ 413,601 $ 144,883 $ 166,871 $ 311,754 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 239,165 — $ 239,165 $ 213,623 $ — $ 213,623 Cartridges 149,504 — 149,504 134,145 — 134,145 Axon Evidence and Cloud Services 24,670 400,979 425,649 11,862 258,664 270,526 Extended Warranties 23,463 45,305 68,768 21,428 36,070 57,498 Axon Body Cameras and Accessories — 124,066 124,066 — 113,399 113,399 Axon Fleet Systems — 95,648 95,648 — 39,840 39,840 Other (1) (2) 14,460 13,989 28,449 13,771 10,991 24,762 Total $ 451,262 $ 679,987 $ 1,131,249 $ 394,829 $ 458,964 853,793 (1) TASER segment “Other” includes smaller categories, such as Virtual Reality (“VR”) hardware, weapons training revenue such as revenue associated with our Master Instructor School, and TASER consumer device sales. (2) Software and Sensors segment “Other” includes revenue from items including Signal Sidearm, Interview Room and Axon Air. The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 342,090 83 % $ 264,644 85 % $ 954,949 84 % $ 707,304 83 % Other countries 71,511 17 47,110 15 176,300 16 146,489 17 Total $ 413,601 100 % $ 311,754 100 % $ 1,131,249 100 % $ 853,793 100 % |
Summary of contract with customer, assets and liabilities | The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the nine months ended September 30, 2023 (in thousands): September 30, 2023 Contract assets, net $ 339,186 Contract liabilities (deferred revenue) 724,973 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 279,223 Contract liabilities (deferred revenue) consisted of the following (in thousands): September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Extended Warranty: TASER $ 12,500 $ 16,748 $ 29,248 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 31,569 18,524 50,093 26,229 15,338 41,567 44,069 35,272 79,341 40,436 32,956 73,392 Hardware: TASER 28,908 29,056 57,964 49,361 12,640 62,001 Software and Sensors 77,207 109,573 186,780 50,426 109,227 159,653 106,115 138,629 244,744 99,787 121,867 221,654 Services: TASER 11,104 6,549 17,653 7,637 9,501 17,138 Software and Sensors 293,603 89,632 383,235 212,177 83,679 295,856 304,707 96,181 400,888 219,814 93,180 312,994 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040 September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 52,512 $ 52,353 $ 104,865 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 402,379 217,729 620,108 288,832 208,244 497,076 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040 |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Cash, Cash Equivalents and Investments | |
Summary of Cash, Cash Equivalents, Marketable Securities, and Available-for-Sale Investments | The following tables summarize our cash, cash equivalents, marketable securities, and available-for-sale investments at September 30, 2023 and December 31, 2022 (in thousands): As of September 30, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 224,437 $ — $ — $ 224,437 $ 224,437 $ — $ — $ — Level 1: Money market funds 25,292 — — 25,292 25,292 — — — Agency bonds 170,838 17 (347) 170,508 33,500 — 137,008 — Treasury bills 133,779 20 — 133,799 122,813 — 10,986 — Marketable securities 90,000 — (21,150) 68,850 — 68,850 — — Subtotal 419,909 37 (21,497) 398,449 181,605 68,850 147,994 — Level 2: Term deposits 203,205 — — 203,205 — — 203,205 — Corporate bonds 121,071 8 (559) 120,520 — — 120,520 — U.S. government 176,371 — (700) 175,671 — — 175,671 — Treasury Inflation-Protected Securities 2,606 — (11) 2,595 — — 2,595 — Commercial paper 65,703 — — 65,703 — — 65,703 — Subtotal 568,956 8 (1,270) 567,694 — — 567,694 — Total $ 1,213,302 $ 45 $ (22,767) $ 1,190,580 $ 406,042 $ 68,850 $ 715,688 $ — As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. government 30,525 — (159) 30,366 — — 30,366 — Treasury Inflation-Protected Securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207 |
Expected Credit Losses (Tables)
Expected Credit Losses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Expected Credit Losses | |
Schedule of roll-forward of allowance for credit losses | The following table provides a roll-forward of the allowance for expected credit losses for finance receivables and off-balance-sheet exposures. The expected credit losses for receivables is deducted from the amortized cost basis of accounts receivable, contract assets, and notes receivable to present the net amount expected to be collected (in thousands): Nine Months Ended September 30, 2023 United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 Provision for expected credit losses 733 146 879 Amounts written off charged against the allowance (719) (105) (824) Other, including foreign currency translation — 8 8 Balance, end of period (1) $ 3,078 $ 615 $ 3,693 (1) Ending balance includes allowance for credit losses recorded in Other current liabilities on the Consolidated Balance Sheet which is related to off-balance-sheet credit exposurse. |
Schedule of allowance for expected credit losses for each type of customer receivable | As of September 30, 2023 and December 31, 2022, the allowance for expected credit losses for each type of customer receivable and off-balance-sheet exposures were as follows (in thousands): September 30, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,144 $ 2,176 Contract assets, net 1,476 1,360 Long-term notes receivable, net of current portion 59 94 Other current liabilities 14 — Total allowance for expected credit losses on customer receivables $ 3,693 $ 3,630 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory | |
Inventory | Inventory consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Raw materials $ 104,372 $ 72,740 Finished goods 155,747 129,731 Total inventory $ 260,119 $ 202,471 |
Strategic Investments (Tables)
Strategic Investments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Strategic Investments | |
Schedule of Roll-Forward of Strategic Investments | The following tables provide a roll-forward of the balance of strategic investments (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 215,945 $ 459 $ 17,233 $ 233,637 $ 264,156 $ 1,195 16,340 $ 281,691 Investments 4,099 1,176 — 5,275 8,004 459 893 9,356 Fair value adjustments: Unrealized losses and impairments — (113) — (113) (718) — — (718) Exercises 1,500 — — 1,500 — — — — Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 — $ 83,520 Investments 15,016 1,176 — 16,192 53,164 459 17,233 70,856 Fair value adjustments: Unrealized gains — — — — 41,893 28,539 — 70,432 Unrealized losses and impairments (72,648) (1,308) — (73,956) (1,109) — — (1,109) Exercises 1,500 — — 1,500 96,719 (30,089) — 66,630 Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Inception to date Strategic investments Warrants Call options Total Investments $ 124,498 $ 4,222 $ 17,233 $ 145,953 Fair value adjustments: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses and impairments (73,756) (1,684) — (75,440) Exercises 98,219 (30,089) — 68,130 Sales (14,546) — — (14,546) Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Variable Interest Entities | |
Schedule of the nonconsolidated VIEs | September 30, 2023 December 31, 2022 Total unconsolidated variable interest entities: Carrying value of variable interest - assets $ 13,016 $ 11,530 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 13,016 11,530 Total $ 13,016 $ 11,530 (1) |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Liabilities | |
Schedule of Accrued liabilities | September 30, 2023 December 31, 2022 Accrued salaries, commissions, benefits and bonus $ 92,437 $ 97,882 Accrued professional, consulting and lobbying fees 6,102 3,861 Accrued warranty expense 3,291 811 Accrued income and other taxes 3,358 13,559 Accrued inventory in transit 11,847 10,548 Other accrued expenses 29,905 29,273 Accrued liabilities $ 146,940 $ 155,934 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Convertible Senior Notes | |
Schedule of net carrying amount of convertible senior notes | The following table summarizes the carrying value of the Notes (in thousands): September 30, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (13,685) (16,033) Convertible notes carrying amount, net $ 676,315 $ 673,967 September 30, 2023 December 31, 2022 2027 Notes $ 738.4 $ 687.3 |
Schedule of interest expense of convertible senior notes | Interest expense related to the Notes was as follows (in thousands): Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Contractual interest expense $ 863 $ 2,588 Amortization of debt issuance costs 797 2,328 Total interest expense $ 1,660 $ 4,916 |
Schedule of convertible note hedge transaction | Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 |
Schedule of warrants details of convertible senior notes | Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stockholders' Equity | |
Summary of Restricted Stock Unit Activity | The following table summarizes RSU activity for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,565 $ 145.38 Granted 464 203.71 Released (371) 118.04 Forfeited (104) 155.25 Units outstanding, end of period 1,554 168.67 $ 309,283 |
Summary of Performance Stock Unit Activity | The following table summarizes PSU activity, inclusive of XSUs, for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,369 $ 43.43 Granted 171 187.74 Released (1,222) 36.60 Forfeited (43) 27.52 Units outstanding, end of period 275 166.05 $ 54,768 |
Summary of the Company's Stock Options Activity | The following table summarizes stock option activity for the nine months ended September 30, 2023 (number of options and aggregate intrinsic value in thousands): Weighted Weighted Average Number Average Remaining of Exercise Contractual Aggregate Options Price Life (years) Intrinsic Value Options outstanding, beginning of year 2,438 $ 28.58 Granted — — Exercised (1,907) 28.58 Expired / terminated — — Options outstanding and exercisable, end of period 531 28.58 4.41 $ 90,476 |
Reported Share-Based Compensation | The following table summarizes the composition of stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of product sales and service sales $ 1,687 $ 1,157 $ 4,685 $ 3,331 Sales, general and administrative expenses 12,886 14,268 43,232 35,860 Research and development expenses 15,414 12,779 48,311 35,263 Total stock-based compensation expense $ 29,987 $ 28,204 $ 96,228 $ 74,454 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accumulated Other Comprehensive Income (Loss). | |
Summary of changes in accumulated other comprehensive income (loss), net of tax | The following tables reflect the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2022 $ (1,251) (5,928) $ (7,179) Other comprehensive income 184 1,676 1,860 Balance, March 31, 2023 $ (1,067) $ (4,252) $ (5,319) Other comprehensive loss (850) (557) (1,407) Balance, June 30, 2023 $ (1,917) $ (4,809) $ (6,726) Other comprehensive income (loss) 656 (6,799) (6,143) Balance, September 30, 2023 $ (1,261) $ (11,608) $ (12,869) Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (489) (1,072) (1,561) Balance, March 31, 2022 $ (696) $ (2,182) $ (2,878) Other comprehensive loss (161) (2,166) (2,327) Balance, June 30, 2022 $ (857) $ (4,348) $ (5,205) Other comprehensive loss (326) (2,275) (2,601) Balance, September 30, 2022 $ (1,183) $ (6,623) $ (7,806) |
Segment Data (Tables)
Segment Data (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Data | |
Summary of Operational Information Relative to the Company's Reportable Segments | Information relative to our reportable segments was as follows (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 153,375 $ 103,068 $ 256,443 $ 139,267 $ 71,131 $ 210,398 Net sales from services 9,195 147,963 157,158 5,616 95,740 101,356 Net sales 162,570 251,031 413,601 144,883 166,871 311,754 Cost of product sales 59,746 56,532 116,278 53,422 40,302 93,724 Cost of service sales 1,252 40,799 42,051 — 24,773 24,773 Cost of sales 60,998 97,331 158,329 53,422 65,075 118,497 Gross margin $ 101,572 $ 153,700 $ 255,272 $ 91,461 $ 101,796 $ 193,257 Research and development $ 15,672 $ 61,208 $ 76,880 $ 13,864 $ 45,263 $ 59,127 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 426,372 $ 282,934 $ 709,306 $ 382,142 $ 204,511 $ 586,653 Net sales from services 24,890 397,053 421,943 12,687 254,453 267,140 Net sales 451,262 679,987 1,131,249 394,829 458,964 853,793 Cost of product sales 170,297 154,757 325,054 142,510 118,068 260,578 Cost of service sales 2,517 112,183 114,700 — 70,256 70,256 Cost of sales 172,814 266,940 439,754 142,510 188,324 330,834 Gross margin $ 278,448 $ 413,047 $ 691,495 $ 252,319 $ 270,640 $ 522,959 Research and development $ 46,128 $ 173,619 $ 219,747 $ 37,076 $ 128,014 $ 165,090 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 USD ($) customer country | Sep. 30, 2023 USD ($) segment country customer item | Dec. 31, 2022 USD ($) customer | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of reportable segments | segment | 2 | ||
Warranty period | 1 year | ||
Cash surrender value of corporate-owned life insurance policies | $ 5,900,000 | $ 5,900,000 | $ 4,300,000 |
Investments in number of unconsolidated affiliates | item | 8 | ||
Denomination of notes used for determination of fair value | 1,000 | $ 1,000 | |
Restricted cash balance | 2,000,000 | 2,000,000 | 1,900,000 |
Prepaid expenses and other assets | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Restricted cash balance | 1,900,000 | 1,900,000 | 1,800,000 |
Other long-term assets | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Restricted cash balance | $ 100,000 | $ 100,000 | $ 100,000 |
Net Sales | Geographic Concentration Risk | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of countries outside the U.S. representing more than 10% of total net sales | country | 0 | 0 | |
Net Sales | Customer Concentration Risk | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of major customers | customer | 0 | 0 | |
Accounts and notes receivable and contract assets | Customer Concentration Risk | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of major customers | customer | 0 | 0 |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - Weighted Average Number of Shares Outstanding and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator for basic and diluted earnings per share: | ||||||||
Net income | $ 59,397 | $ 12,420 | $ 45,139 | $ 12,131 | $ 50,962 | $ 54,871 | $ 116,956 | $ 117,964 |
Denominator: | ||||||||
Weighted average shares outstanding - basic (in shares) | 74,826 | 71,107 | 73,904 | 71,033 | ||||
Dilutive effect of stock-based awards (in shares) | 1,126 | 1,418 | 1,308 | 1,353 | ||||
Diluted weighted average shares outstanding (in shares) | 75,952 | 72,525 | 75,212 | 72,386 | ||||
Net income per common share: | ||||||||
Basic (in dollars per share) | $ 0.79 | $ 0.17 | $ 1.58 | $ 1.66 | ||||
Diluted (in dollars per share) | $ 0.78 | $ 0.17 | $ 1.56 | $ 1.63 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - Antidilutive Securities Excluded From Computation of EPS (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive securities excluded from computation of earnings per share | ||||
Total potentially dilutive securities | 6,515 | 2,977 | 6,504 | 2,952 |
Stock-based awards | ||||
Antidilutive securities excluded from computation of earnings per share | ||||
Total potentially dilutive securities | 481 | 2,977 | 470 | 2,952 |
2027 Notes | ||||
Antidilutive securities excluded from computation of earnings per share | ||||
Total potentially dilutive securities | 3,017 | 3,017 | ||
2027 Warrants | ||||
Antidilutive securities excluded from computation of earnings per share | ||||
Total potentially dilutive securities | 3,017 | 3,017 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies - Summary of Changes in Estimated Warranty Reserve (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Movement in Standard and Extended Product Warranty | ||
Balance, beginning of period | $ 811 | $ 2,822 |
Utilization of reserve | (901) | (1,988) |
Warranty expense | 3,381 | 161 |
Balance, end of period | $ 3,291 | $ 995 |
Revenues - Revenues By Products
Revenues - Revenues By Products And Service Offerings (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | $ 413,601 | $ 311,754 | $ 1,131,249 | $ 853,793 |
TASER Devices (Professional) | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 86,718 | 80,146 | 239,165 | 213,623 |
Cartridges | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 54,279 | 46,475 | 149,504 | 134,145 |
Axon Evidence and Cloud Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 159,538 | 101,939 | 425,649 | 270,526 |
Extended Warranties | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 24,132 | 21,801 | 68,768 | 57,498 |
Axon Body Cameras and Accessories | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 52,488 | 40,944 | 124,066 | 113,399 |
Axon Fleet Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 26,716 | 10,139 | 95,648 | 39,840 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 9,730 | 10,310 | 28,449 | 24,762 |
TASER | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 162,570 | 144,883 | 451,262 | 394,829 |
TASER | TASER Devices (Professional) | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 86,718 | 80,146 | 239,165 | 213,623 |
TASER | Cartridges | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 54,279 | 46,475 | 149,504 | 134,145 |
TASER | Axon Evidence and Cloud Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 8,975 | 5,125 | 24,670 | 11,862 |
TASER | Extended Warranties | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 8,078 | 7,290 | 23,463 | 21,428 |
TASER | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 4,520 | 5,847 | 14,460 | 13,771 |
Software and Sensors | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 251,031 | 166,871 | 679,987 | 458,964 |
Software and Sensors | Axon Evidence and Cloud Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 150,563 | 96,814 | 400,979 | 258,664 |
Software and Sensors | Extended Warranties | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 16,054 | 14,511 | 45,305 | 36,070 |
Software and Sensors | Axon Body Cameras and Accessories | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 52,488 | 40,944 | 124,066 | 113,399 |
Software and Sensors | Axon Fleet Systems | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 26,716 | 10,139 | 95,648 | 39,840 |
Software and Sensors | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | $ 5,210 | $ 4,463 | $ 13,989 | $ 10,991 |
Revenues - Revenues By Geograph
Revenues - Revenues By Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | $ 413,601 | $ 311,754 | $ 1,131,249 | $ 853,793 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | 342,090 | 264,644 | 954,949 | 707,304 |
Other countries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customers | $ 71,511 | $ 47,110 | $ 176,300 | $ 146,489 |
Revenue from Contract with Customer | Geographic Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk (as a percentage) | 100% | 100% | 100% | 100% |
Revenue from Contract with Customer | Geographic Concentration Risk | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk (as a percentage) | 83% | 85% | 84% | 83% |
Revenue from Contract with Customer | Geographic Concentration Risk | Other countries | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration risk (as a percentage) | 17% | 15% | 16% | 17% |
Revenues - Contract Assets, Con
Revenues - Contract Assets, Contract Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Revenues. | ||
Contract assets, net | $ 339,186 | |
Contract liabilities (deferred revenue) | 724,973 | $ 608,040 |
Revenue recognized in the period from: | ||
Amounts included in contract liabilities at the beginning of the period | $ 279,223 |
Revenues - Schedule Of Contract
Revenues - Schedule Of Contract Liabilities - Deferred revenue (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Disaggregation of Revenue [Line Items] | ||
Current | $ 454,891 | $ 360,037 |
Long-Term | 270,082 | 248,003 |
Total | 724,973 | 608,040 |
TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 52,512 | 71,205 |
Long-Term | 52,353 | 39,759 |
Total | 104,865 | 110,964 |
Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 402,379 | 288,832 |
Long-Term | 217,729 | 208,244 |
Total | 620,108 | 497,076 |
Extended Warranty | ||
Disaggregation of Revenue [Line Items] | ||
Current | 44,069 | 40,436 |
Long-Term | 35,272 | 32,956 |
Total | 79,341 | 73,392 |
Extended Warranty | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 12,500 | 14,207 |
Long-Term | 16,748 | 17,618 |
Total | 29,248 | 31,825 |
Extended Warranty | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 31,569 | 26,229 |
Long-Term | 18,524 | 15,338 |
Total | 50,093 | 41,567 |
Hardware | ||
Disaggregation of Revenue [Line Items] | ||
Current | 106,115 | 99,787 |
Long-Term | 138,629 | 121,867 |
Total | 244,744 | 221,654 |
Hardware | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 28,908 | 49,361 |
Long-Term | 29,056 | 12,640 |
Total | 57,964 | 62,001 |
Hardware | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 77,207 | 50,426 |
Long-Term | 109,573 | 109,227 |
Total | 186,780 | 159,653 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Current | 304,707 | 219,814 |
Long-Term | 96,181 | 93,180 |
Total | 400,888 | 312,994 |
Services | TASER | ||
Disaggregation of Revenue [Line Items] | ||
Current | 11,104 | 7,637 |
Long-Term | 6,549 | 9,501 |
Total | 17,653 | 17,138 |
Services | Software and Sensors | ||
Disaggregation of Revenue [Line Items] | ||
Current | 293,603 | 212,177 |
Long-Term | 89,632 | 83,679 |
Total | $ 383,235 | $ 295,856 |
Revenues - Revenue Performance
Revenues - Revenue Performance Obligations (Details) $ in Billions | Sep. 30, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 5.8 |
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | |
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]: 2023-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation to be recognized in the next twelve months (as a percentage) | 25% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2033-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 10 years |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | $ 1,213,302 | $ 1,213,302 | $ 1,183,222 | |
Gross Unrealized Gains | 45 | 45 | 57 | |
Gross Unrealized Losses | (22,767) | (22,767) | (52,379) | |
Fair Value | 1,190,580 | 1,190,580 | 1,130,900 | |
Cash and Cash Equivalents | 406,042 | 406,042 | 353,684 | |
Marketable Securities | 68,850 | 68,850 | 39,240 | |
Short-Term Investments | 715,688 | 715,688 | 581,769 | |
Long-Term Investments | 156,207 | |||
Debt securities, available-for-sale, unrealized Loss | 390,400 | |||
Continuous unrealized loss position of available-for-sale investments, unrealized losses | 27,000 | 27,000 | ||
Continuous unrealized loss position of available-for-sale investments, gross unrealized losses | 300 | 300 | ||
Share Purchase Agreement with CLBT | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Marketable Securities | $ 90,000 | |||
Investment owned, shares held | 9 | |||
Investment, type | Common stock | |||
Marketable securities, unrealized gain (loss) | 4,100 | 29,600 | ||
Fair Value, Inputs, Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 419,909 | 419,909 | 378,805 | |
Gross Unrealized Gains | 37 | 37 | 24 | |
Gross Unrealized Losses | (21,497) | (21,497) | (51,026) | |
Fair Value | 398,449 | 398,449 | 327,803 | |
Cash and Cash Equivalents | 181,605 | 181,605 | 115,769 | |
Marketable Securities | 68,850 | 68,850 | 39,240 | |
Short-Term Investments | 147,994 | 147,994 | 78,427 | |
Long-Term Investments | 94,367 | |||
Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 568,956 | 568,956 | 660,673 | |
Gross Unrealized Gains | 8 | 8 | 33 | |
Gross Unrealized Losses | (1,270) | (1,270) | (1,353) | |
Fair Value | 567,694 | 567,694 | 659,353 | |
Cash and Cash Equivalents | 94,171 | |||
Short-Term Investments | 567,694 | 567,694 | 503,342 | |
Long-Term Investments | 61,840 | |||
Cash | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 224,437 | 224,437 | 143,744 | |
Fair Value | 224,437 | 224,437 | 143,744 | |
Cash and Cash Equivalents | 224,437 | 224,437 | 143,744 | |
Money market funds | Fair Value, Inputs, Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 25,292 | 25,292 | 2,669 | |
Fair Value | 25,292 | 25,292 | 2,669 | |
Cash and Cash Equivalents | 25,292 | 25,292 | 2,669 | |
Agency bonds | Fair Value, Inputs, Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 170,838 | 170,838 | 164,486 | |
Gross Unrealized Gains | 17 | 17 | 6 | |
Gross Unrealized Losses | (347) | (347) | (263) | |
Fair Value | 170,508 | 170,508 | 164,229 | |
Cash and Cash Equivalents | 33,500 | 33,500 | ||
Short-Term Investments | 137,008 | 137,008 | 69,862 | |
Long-Term Investments | 94,367 | |||
Treasury bills | Fair Value, Inputs, Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 133,779 | 133,779 | ||
Gross Unrealized Gains | 20 | 20 | ||
Fair Value | 133,799 | 133,799 | ||
Cash and Cash Equivalents | 122,813 | 122,813 | ||
Short-Term Investments | 10,986 | 10,986 | ||
Marketable securities | Fair Value, Inputs, Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 90,000 | 90,000 | 90,000 | |
Gross Unrealized Losses | (21,150) | (21,150) | (50,760) | |
Fair Value | 68,850 | 68,850 | 39,240 | |
Marketable Securities | 68,850 | 68,850 | 39,240 | |
State and municipal obligations | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 4,980 | |||
Gross Unrealized Losses | (33) | |||
Fair Value | 4,947 | |||
Short-Term Investments | 4,947 | |||
Corporate bonds | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 257,422 | |||
Gross Unrealized Gains | 33 | |||
Gross Unrealized Losses | (1,159) | |||
Fair Value | 256,296 | |||
Cash and Cash Equivalents | 28,883 | |||
Short-Term Investments | 168,074 | |||
Long-Term Investments | 59,339 | |||
Treasury bills | Fair Value, Inputs, Level 1 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 121,650 | |||
Gross Unrealized Gains | 18 | |||
Gross Unrealized Losses | (3) | |||
Fair Value | 121,665 | |||
Cash and Cash Equivalents | 113,100 | |||
Short-Term Investments | 8,565 | |||
Certificates of deposit | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 5,002 | |||
Fair Value | 5,002 | |||
Short-Term Investments | 5,002 | |||
Term deposits | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 203,205 | 203,205 | 200,000 | |
Fair Value | 203,205 | 203,205 | 200,000 | |
Cash and Cash Equivalents | 25,000 | |||
Short-Term Investments | 203,205 | 203,205 | 175,000 | |
Corporate bonds | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 121,071 | 121,071 | ||
Gross Unrealized Gains | 8 | 8 | ||
Gross Unrealized Losses | (559) | (559) | ||
Fair Value | 120,520 | 120,520 | ||
Short-Term Investments | 120,520 | 120,520 | ||
Commercial paper | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 65,703 | 65,703 | 160,241 | |
Fair Value | 65,703 | 65,703 | 160,241 | |
Cash and Cash Equivalents | 40,288 | |||
Short-Term Investments | 65,703 | 65,703 | 119,953 | |
U.S. government | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 176,371 | 176,371 | 30,525 | |
Gross Unrealized Losses | (700) | (700) | (159) | |
Fair Value | 175,671 | 175,671 | 30,366 | |
Short-Term Investments | 175,671 | 175,671 | 30,366 | |
Treasury Inflation-Protected Securities | Fair Value, Inputs, Level 2 | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Amortized Cost | 2,606 | 2,606 | 2,503 | |
Gross Unrealized Losses | (11) | (11) | (2) | |
Fair Value | 2,595 | 2,595 | 2,501 | |
Short-Term Investments | $ 2,595 | $ 2,595 | ||
Long-Term Investments | $ 2,501 |
Expected Credit Losses (Details
Expected Credit Losses (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | $ 3,630 |
Provision for expected credit losses | 879 |
Amounts written off charged against the allowance | (824) |
Other, including foreign currency translation | 8 |
Balance, end of period | 3,693 |
United States | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | 3,064 |
Provision for expected credit losses | 733 |
Amounts written off charged against the allowance | (719) |
Balance, end of period | 3,078 |
Other countries | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance, beginning of period | 566 |
Provision for expected credit losses | 146 |
Amounts written off charged against the allowance | (105) |
Other, including foreign currency translation | 8 |
Balance, end of period | $ 615 |
Expected Credit Losses - Type O
Expected Credit Losses - Type Of Customer Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Expected Credit Losses | ||
Accounts receivable and notes receivable, current | $ 2,144 | $ 2,176 |
Contract assets, net | 1,476 | 1,360 |
Long-term notes receivable, net of current portion | 59 | 94 |
Other current liabilities | 14 | |
Total allowance for expected credit losses on customer receivables | $ 3,693 | $ 3,630 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory | ||
Raw materials | $ 104,372 | $ 72,740 |
Finished goods | 155,747 | 129,731 |
Total inventory | $ 260,119 | $ 202,471 |
Strategic Investments (Details)
Strategic Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 43 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | |
Equity Securities without Readily Determinable Fair Value [Line Items] | |||||
Balance, beginning of period | $ 233,637 | $ 281,691 | $ 296,563 | $ 83,520 | |
Investments | 5,275 | 9,356 | 16,192 | 70,856 | $ 145,953 |
Fair value adjustments, Realized gains | 12,312 | ||||
Fair value adjustments, Unrealized gains | 0 | 70,432 | 103,890 | ||
Fair value adjustments, Unrealized losses and impairments | (113) | (718) | (73,956) | (1,109) | (75,440) |
Exercises | 1,500 | 1,500 | 66,630 | 68,130 | |
Sales | (14,546) | ||||
Balance, end of period | 240,299 | 290,329 | 240,299 | 290,329 | 240,299 |
Strategic investments | |||||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||||
Balance, beginning of period | 215,945 | 264,156 | 277,676 | 80,775 | |
Investments | 4,099 | 8,004 | 15,016 | 53,164 | 124,498 |
Fair value adjustments, Realized gains | 12,312 | ||||
Fair value adjustments, Unrealized gains | 0 | 41,893 | 74,817 | ||
Fair value adjustments, Unrealized losses and impairments | (718) | (72,648) | (1,109) | (73,756) | |
Exercises | 1,500 | 1,500 | 96,719 | 98,219 | |
Sales | (14,546) | ||||
Balance, end of period | 221,544 | 271,442 | 221,544 | 271,442 | 221,544 |
Warrants | |||||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||||
Balance, beginning of period | 459 | 1,195 | 1,654 | 2,745 | |
Investments | 1,176 | 459 | 1,176 | 459 | 4,222 |
Fair value adjustments, Unrealized gains | 0 | 28,539 | 29,073 | ||
Fair value adjustments, Unrealized losses and impairments | (113) | (1,308) | (1,684) | ||
Exercises | (30,089) | (30,089) | |||
Balance, end of period | 1,522 | 1,654 | 1,522 | 1,654 | 1,522 |
Call options | |||||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||||
Balance, beginning of period | 17,233 | 16,340 | 17,233 | ||
Investments | 893 | 17,233 | 17,233 | ||
Fair value adjustments, Unrealized gains | 0 | 0 | |||
Balance, end of period | $ 17,233 | $ 17,233 | 17,233 | $ 17,233 | $ 17,233 |
Strategic Investments And Warrants | |||||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||||
Unrealized impairment loss | $ 73,800 |
Variable Interest Entities (Det
Variable Interest Entities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Total unconsolidated variable interest entities: | ||
Carrying value of variable interest - assets | $ 3,254,183 | $ 2,851,894 |
Carrying value of variable interest - liabilities | 1,733,066 | 1,583,403 |
Unconsolidated VIEs | ||
Total unconsolidated variable interest entities: | ||
Carrying value of variable interest - assets | 13,016 | 11,530 |
Carrying value of variable interest - liabilities | 0 | 0 |
Maximum exposure to loss: | ||
Non-public equity | 13,016 | 11,530 |
Total | $ 13,016 | $ 11,530 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Liabilities | ||||
Accrued salaries, commissions, benefits and bonus | $ 92,437 | $ 97,882 | ||
Accrued professional, consulting and lobbying fees | 6,102 | 3,861 | ||
Accrued warranty expense | 3,291 | 811 | $ 995 | $ 2,822 |
Accrued income and other taxes | 3,358 | 13,559 | ||
Accrued inventory in transit | 11,847 | 10,548 | ||
Other accrued expenses | 29,905 | 29,273 | ||
Accrued liabilities | $ 146,940 | $ 155,934 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) - 2027 Notes - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended |
Dec. 31, 2022 | Sep. 30, 2023 | |
Senior Convertible Notes | ||
Aggregate principal amount | $ 690,000 | $ 690,000 |
Interest rate (as a percent) | 0.50% | |
Issuance costs | $ 16,200 | |
Net proceeds from issuance of notes | $ 673,800 | |
Effective interest rate | 0.99% | |
Repurchase price (as percentage) | 100% | |
Maximum | ||
Senior Convertible Notes | ||
Additional principal amount purchase option | $ 90,000 |
Convertible Senior Notes - Net
Convertible Senior Notes - Net carrying amount (Details) - 2027 Notes - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Senior Convertible Notes | ||
Principal | $ 690,000 | $ 690,000 |
Unamortized debt issuance costs | (13,685) | (16,033) |
Convertible notes carrying amount, net | $ 676,315 | $ 673,967 |
Convertible Senior Notes - Esti
Convertible Senior Notes - Estimated Fair Value (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Senior Convertible Notes | ||
Denomination of notes used for determination of fair value | $ 1,000 | |
2027 Notes | ||
Senior Convertible Notes | ||
Denomination of notes used for determination of fair value | 1,000 | $ 1,000 |
Fair value of notes | $ 738,400,000 | $ 687,300,000 |
Convertible Senior Notes - Inte
Convertible Senior Notes - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Senior Convertible Notes | ||
Amortization of debt issuance costs | $ 2,328 | |
Convertible Note Hedge 2027 | ||
Senior Convertible Notes | ||
Contractual interest expense | $ 863 | 2,588 |
Amortization of debt issuance costs | 797 | 2,328 |
Total interest expense | $ 1,660 | $ 4,916 |
Convertible Senior Notes - Hedg
Convertible Senior Notes - Hedge (Details) - 2027 Note Hedge | Sep. 30, 2023 USD ($) security |
Senior Convertible Notes | |
Purchase price | $ 194,994 |
Shares purchased | 3,016,680 |
Convertible Senior Notes - Warr
Convertible Senior Notes - Warrants (Details) - 2027 Warrant | 9 Months Ended |
Sep. 30, 2023 USD ($) D $ / security shares | |
Senior Convertible Notes | |
Proceeds | $ | $ 124,269 |
Shares | shares | 3,016,680 |
Strike Price | $ / security | 338.86 |
Warrants exercise trading day period | D | 60 |
Income Taxes (Details)
Income Taxes (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Income Taxes | |
Deferred tax assets, net | $ 211.4 |
Liability for unrecognized tax benefits | 25.6 |
Research and development tax credit studies | $ 5.5 |
Effective tax rate (as a percentage) | (17.90%) |
Effective tax rate, before discrete period adjustment (as a percentage) | 17.40% |
Discrete tax benefit, stock-based compensation | $ 36.8 |
Stockholders' Equity - CEO Perf
Stockholders' Equity - CEO Performance Award - Additional Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 64 Months Ended | |
May 24, 2018 tranche shares | Sep. 30, 2023 USD ($) | Sep. 30, 2023 item shares | Sep. 30, 2023 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recorded share-based compensation expense | $ | $ 0 | $ 246 | ||
Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options, Granted (in shares) | shares | 6,365,856 | |||
Chief Executive Officer | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of market capitalization and operational goals | item | 12 | |||
Number of operational goals | item | 12 | |||
Number of vesting tranches of share-based awards | tranche | 12 | |||
Chief Executive Officer | Performance Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of options vested | shares | 6,400,000 |
Stockholders' Equity - eXponent
Stockholders' Equity - eXponential Stock Performance Plan (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 56 Months Ended | 64 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recorded share-based compensation expense | $ 0 | $ 246 | ||
eXponential Stock Units | 2019 eXponential Stock Performance Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recorded share-based compensation expense | $ 199.4 | |||
Unrecognized stock-based compensation expense | $ 0.5 | $ 0.5 | $ 0.5 | $ 0.5 |
Weighted average period over which costs are recognized | 2 months 12 days |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of RSU and PSU Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Number of Units outstanding, beginning of year (in shares) | shares | 1,565 |
Number of Units, Granted (in shares) | shares | 464 |
Number of Units, Released (in shares) | shares | (371) |
Number of Units, Forfeited (in shares) | shares | (104) |
Number of Units outstanding, end of period (in shares) | shares | 1,554 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted Average Grant Date Fair Value, Units outstanding, beginning of year (in dollars per share) | $ / shares | $ 145.38 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 203.71 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | $ / shares | 118.04 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 155.25 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ / shares | $ 168.67 |
Aggregate intrinsic value at end of period | $ | $ 309,283 |
Performance Stock Units (PSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Number of Units outstanding, beginning of year (in shares) | shares | 1,369 |
Number of Units, Granted (in shares) | shares | 171 |
Number of Units, Released (in shares) | shares | (1,222) |
Number of Units, Forfeited (in shares) | shares | (43) |
Number of Units outstanding, end of period (in shares) | shares | 275 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted Average Grant Date Fair Value, Units outstanding, beginning of year (in dollars per share) | $ / shares | $ 43.43 |
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares | 187.74 |
Weighted Average Grant Date Fair Value, Released (in dollars per share) | $ / shares | 36.60 |
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares | 27.52 |
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) | $ / shares | $ 166.05 |
Aggregate intrinsic value at end of period | $ | $ 54,768 |
Stockholders' Equity - RSU and
Stockholders' Equity - RSU and PSU - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Tax payments, for net share settlement of share based award | $ 104,076 | $ 2,391 |
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) | $ 198.99 | |
Unrecognized stock-based compensation expense | $ 193,800 | |
Weighted average period over which costs are recognized | 2 years 1 month 6 days | |
Shares withheld, for net share settlement of share based award (in shares) | 17,000 | |
Tax payments, for net share settlement of share based award | $ 3,300 | |
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) | $ 198.99 | |
Unrecognized stock-based compensation expense | $ 22,600 | |
Weighted average period over which costs are recognized | 4 years 9 months 18 days | |
Shares withheld, for net share settlement of share based award (in shares) | 500,000 | |
Tax payments, for net share settlement of share based award | $ 100,800 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Activity - Additional Information (Details) - Employee Stock Option [Member] shares in Millions | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Aggregate intrinsic value price per share (in dollars per share) | $ / shares | $ 198.99 |
Shares sold to cover tax obligation | shares | 0.9 |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of the Company's Stock Options Activity (Details) - Employee Stock Option [Member] $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of options, Options outstanding, beginning of year (in shares) | shares | 2,438 |
Number of options, Exercised (in shares) | shares | (1,907) |
Number of options, Options outstanding and exercisable, end of period (in shares) | shares | 531 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Weighted average exercise price, Options outstanding, beginning of year (in dollars per share) | $ / shares | $ 28.58 |
Weighted average exercise price, Exercised (in dollars per share) | $ / shares | 28.58 |
Weighted average exercise price, Options outstanding and exercisable, end of period (in dollars per share) | $ / shares | $ 28.58 |
Weighted average remaining contractual life, Options outstanding and exercisable, end of period | 4 years 4 months 28 days |
Aggregate intrinsic value, Options outstanding and exercisable, end of period | $ | $ 90,476 |
Stockholders' Equity - Reported
Stockholders' Equity - Reported Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 29,987 | $ 28,204 | $ 96,228 | $ 74,454 |
Cost of product sales and service sales | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 1,687 | 1,157 | 4,685 | 3,331 |
Sales, general and administrative expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 12,886 | 14,268 | 43,232 | 35,860 |
Research and development expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 15,414 | $ 12,779 | $ 48,311 | $ 35,263 |
Stockholders' Equity - Stock In
Stockholders' Equity - Stock Incentive and Repurchase Plan - Additional Information (Details) - USD ($) shares in Millions, $ in Millions | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | May 31, 2022 | Feb. 29, 2016 | |
2022 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock reserved for issuance (in shares) | 2.5 | |||
2016 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding common stock repurchase program authorized amount (up to) | $ 50 | |||
Shares repurchased during period (in shares) | 0 | 0 | ||
Remaining authorized repurchase amount | $ 16.3 | |||
2022 Inducement Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for grant (in shares) | 2.3 |
Stockholders' Equity - At-the-M
Stockholders' Equity - At-the-Market equity offering - Additional Information (Details) - ATM Offering $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock sold (in shares) | shares | 467,594 |
Gross proceeds | $ | $ 96.4 |
Net proceeds | $ | 94.7 |
Commissions | $ | $ 1.7 |
Maximum number of common stock shares to be sold | shares | 3,000,000 |
Number of shares remaining to be sold | shares | 2,000,000 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated leverage ratio | 0.27 | |
Senior Unsecured Multi Currency Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Total availability under line of credit agreement | $ 200 | |
Line of Credit | ||
Debt Instrument [Line Items] | ||
Total availability under line of credit agreement | 30 | |
Accordion feature allowing for increase in borrowing capacity | 300 | |
Letters of credit outstanding amount | $ 7.4 | |
Available borrowing under letter of credit | 192.6 | |
Line of credit borrowings | $ 0 | $ 0 |
Line of Credit | 2027 Notes | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity, Prior to Stated Maturity of Convertible Senior Notes | 6 months | |
Minimum | ||
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated interest coverage ratio | 3.50 | |
Minimum | Line of Credit | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate (as a percentage) | 1.25% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Debt instrument covenant consolidated leverage ratio | 3.50 | |
Maximum | Line of Credit | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Debt instrument basis spread on variable rate (as a percentage) | 1.75% |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 9 Months Ended | |
Oct. 10, 2023 | Sep. 30, 2023 USD ($) lawsuit | |
Loss Contingencies [Line Items] | ||
Number of lawsuits against Company | lawsuit | 4 | |
Amount self-insured for any product claim | $ 5 | |
Legal dispute period | 5 years | |
Surety Bond | ||
Loss Contingencies [Line Items] | ||
Letters of credit outstanding amount | 7.4 | |
Expiring in 2024 | Surety Bond | ||
Loss Contingencies [Line Items] | ||
Bonds outstanding | $ 10.5 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Accumulated other comprehensive income (loss): | ||||||
Beginning balance | $ 1,444,998 | $ 1,402,995 | $ 1,268,491 | $ 1,193,651 | $ 1,124,789 | $ 1,047,849 |
Other comprehensive (loss) income | (6,143) | (1,407) | 1,860 | (2,601) | (2,327) | (1,561) |
Ending balance | 1,521,117 | 1,444,998 | 1,402,995 | 1,231,313 | 1,193,651 | 1,124,789 |
Accumulated Other Comprehensive Income (Loss) | ||||||
Accumulated other comprehensive income (loss): | ||||||
Beginning balance | (6,726) | (5,319) | (7,179) | (5,205) | (2,878) | (1,317) |
Other comprehensive (loss) income | (6,143) | (1,407) | 1,860 | (2,601) | (2,327) | (1,561) |
Ending balance | (12,869) | (6,726) | (5,319) | (7,806) | (5,205) | (2,878) |
Unrealized Gains (Losses) on Available-for-Sale Investments | ||||||
Accumulated other comprehensive income (loss): | ||||||
Beginning balance | (1,917) | (1,067) | (1,251) | (857) | (696) | (207) |
Other comprehensive (loss) income | 656 | (850) | 184 | (326) | (161) | (489) |
Ending balance | (1,261) | (1,917) | (1,067) | (1,183) | (857) | (696) |
Foreign Currency Translation | ||||||
Accumulated other comprehensive income (loss): | ||||||
Beginning balance | (4,809) | (4,252) | (5,928) | (4,348) | (2,182) | (1,110) |
Other comprehensive (loss) income | (6,799) | (557) | 1,676 | (2,275) | (2,166) | (1,072) |
Ending balance | $ (11,608) | $ (4,809) | $ (4,252) | $ (6,623) | $ (4,348) | $ (2,182) |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments of company | segment | 2 | |||
Net sales | $ 413,601 | $ 311,754 | $ 1,131,249 | $ 853,793 |
Cost of sales | 158,329 | 118,497 | 439,754 | 330,834 |
Gross margin | 255,272 | 193,257 | 691,495 | 522,959 |
Research and development | 76,880 | 59,127 | 219,747 | 165,090 |
TASER | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 162,570 | 144,883 | 451,262 | 394,829 |
Cost of sales | 60,998 | 53,422 | 172,814 | 142,510 |
Gross margin | 101,572 | 91,461 | 278,448 | 252,319 |
Research and development | 15,672 | 13,864 | 46,128 | 37,076 |
Software and Sensors | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 251,031 | 166,871 | 679,987 | 458,964 |
Cost of sales | 97,331 | 65,075 | 266,940 | 188,324 |
Gross margin | 153,700 | 101,796 | 413,047 | 270,640 |
Research and development | 61,208 | 45,263 | 173,619 | 128,014 |
Product | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 256,443 | 210,398 | 709,306 | 586,653 |
Cost of sales | 116,278 | 93,724 | 325,054 | 260,578 |
Product | TASER | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 153,375 | 139,267 | 426,372 | 382,142 |
Cost of sales | 59,746 | 53,422 | 170,297 | 142,510 |
Product | Software and Sensors | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 103,068 | 71,131 | 282,934 | 204,511 |
Cost of sales | 56,532 | 40,302 | 154,757 | 118,068 |
Service | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 157,158 | 101,356 | 421,943 | 267,140 |
Cost of sales | 42,051 | 24,773 | 114,700 | 70,256 |
Service | TASER | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 9,195 | 5,616 | 24,890 | 12,687 |
Cost of sales | 1,252 | 2,517 | ||
Service | Software and Sensors | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 147,963 | 95,740 | 397,053 | 254,453 |
Cost of sales | $ 40,799 | $ 24,773 | $ 112,183 | $ 70,256 |
Business Acquisition (Details)
Business Acquisition (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Business Acquisition | ||
Goodwill | $ 57,344 | $ 44,983 |
Business Acquisitions | ||
Business Acquisition | ||
Total Consideration | 23,900 | |
Contingent consideration, Amount | 2,200 | |
Transaction costs | 1,700 | |
Goodwill | 12,900 | |
Identifiable intangible assets | 11,500 | |
Net tangible assets | 2,300 | |
Deferred tax liability | $ 2,800 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net Income (Loss) | $ 59,397 | $ 12,420 | $ 45,139 | $ 12,131 | $ 50,962 | $ 54,871 | $ 116,956 | $ 117,964 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | The table below describes the contracts, instructions or written plans for the purchase or sale of securities adopted by our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) during the three months ended September 30, 2023, that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Certain of our officers or directors have made, and may from time to time make, elections to have shares withheld or sold to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K). No other Rule 10b5-1 trading arrangements or “non-Rule 10b5-1 trading arrangements” (as defined by S-K Item 408(c)) were entered into, modified, or terminated by our directors or officers during such period. Name and Title Adoption Date Expiration Date Aggregate Number of Securities to be Sold Jeffrey Kunins, Chief Product Officer and Chief Technology Officer August 11, 2023 January 15, 2024 41,167 Brittany Bagley, Chief Operating Officer and Chief Financial Officer August 18, 2023 November 30, 2024 15,000 Joshua Isner, President September 15, 2023 December 31, 2024 35,400 |
Rule 10b5-1 Arrangement Adopted | true |
Jeffrey Kunins | |
Trading Arrangements, by Individual | |
Adoption Date | August 11, 2023 |
Aggregate Available | 41,167 |
Expiration Date | January 15, 2024 |
Brittany Bagley | |
Trading Arrangements, by Individual | |
Adoption Date | August 18, 2023 |
Aggregate Available | 15,000 |
Expiration Date | November 30, 2024 |
Joshua Isner | |
Trading Arrangements, by Individual | |
Adoption Date | September 15, 2023 |
Aggregate Available | 35,400 |
Expiration Date | December 31, 2024 |