September 26, 2019
Mr. Jawad A. Ahsan
Chief Financial Officer
Axon Enterprise, Inc.
17800 North 85th Street
Scottsdale, Arizona 85255
Re: Axon Enterprise, Inc.
Form 10-K for the Year Ended December 31, 2018
Filed February 27, 2019
File No. 001-16391
Dear Mr. Ahsan:
We have reviewed your filing and have the following comment. In our
comment, we
may ask you to provide us with information so we may better understand your
disclosure.
Please respond to this comment within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comment applies to your facts and circumstances, please tell us why in your
response.
After reviewing your response to this comment, we may have additional
comments.
Form 10-K for the Year Ended December 31, 2018
Financial Statements
1. Organization and Summary of Significant Accounting Policies
Revenue Recognition, Deferred Revenue and Accounts and Notes Receivable, page
59
1. You state that you derive revenues from two primary sources (1) the sale
of physical
product including but not limited to CEWs, Axon cameras and Axon signal
enabled
devices and (2) subscriptions to your Axon Evidence management software
as a service.
You state that many of your products and services are sold on a
standalone basis and you
also bundle your hardware products and services together and sell them to
customers in a
single transaction. Please address the following:
You indicate you enter into contracts that can include various
combinations of
products and services, each of which is generally distinct and
accounted for as a
separate performance obligation. More fully explain to us how you
determine your
products and services are capable of being distinct and are distinct
within the context
of the contract. Also, since you indicate your combination of
products and services
Mr. Jawad A. Ahsan
Axon Enterprise, Inc.
September 26, 2019
Page 2
are generally distinct, tell us any circumstances when you
determine your products and
services are not distinct, explain how you account for such
contracts, and quantify the
revenue from such contracts, if possible. Refer to ASC
606-10-25-19 through 25-22;
You indicate for contracts with multiple performance obligations,
you allocate the
contract transaction price to each performance obligation using
your estimate of the
standalone selling price of each distinct good or service in the
contract. More fully
explain to us how you determine each performance obligation and
how you estimate
standalone selling prices. Tell us what products and services are
generally sold
separately. Also, explain to us what consideration you give to
using customary
discounts or other adjustments to list prices, as applicable, how
you allocate trade-in
allowances, and how you estimate amounts allocated to stand ready
obligations. Refer
to ASC 606-10-32-31 through 32-41;
You disclose performance obligations to deliver products including
CEWs, cameras
and related accessories are generally satisfied at a point in
time. More fully explain to
us when performance obligations to deliver these products are not
satisfied at a point
in time. Specifically address when and how you recognize revenue
for contracts that
bundle Axon cameras and Axon signal enable devises with Axon
Evidence and cloud
services and explain to us if Axon cameras and signal enabled
devices are functional
without Axon Evidence and/or cloud services;
More fully explain to us how you recognize revenue for bundle
services, including
how you recognize revenue under the extended payment plan for
Taser 60. Address if
the annual payments compensate you for your performance to date.
Refer to ASC
606-10-25-27 and ASC 606-10-55-11 through 55-15; and
In a risk factor, you indicate you sell products and services to
distributors and through
direct sales. Tell us what consideration you gave to presenting
disaggregated revenue
by end user in accordance with ASC 606-10-50-5.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Ernest Greene, Staff Accountant at 202-551-3733 or Anne
McConnell,
Staff Accountants at 202-551-3709 if you have questions.
Sincerely,
FirstName LastNameMr. Jawad A. Ahsan
Division of
Corporation Finance
Comapany NameAxon Enterprise, Inc.
Office of
Manufacturing and
September 26, 2019 Page 2 Construction
FirstName LastName