Quarterly Report (10-q)

Date : 11/08/2019 @ 11:07AM
Source : Edgar (US Regulatory)
Stock : Axon Enterprise Inc (AAXN)
Quote : 67.37  0.68 (1.02%) @ 4:59AM
Axon Enterprise share price Chart
After Hours
Last Trade
Last $ 67.30 ▼ -0.07 (-0.10%)

Quarterly Report (10-q)

175000000220000000210000000125000000230000000155000000200000000190000000201005800014100580001210058000710058000181005800016100580001010058000860058000false--12-31Q320190001069183188200019830000.000010.0000120000000020000000058810637593207935881063759320793P8YP7YP10YP4YP15YP11YP4YP3YP5YP3YP4YP3YP2Y00.000010.00001250000002500000000003988500038470000700000900000P5Y202202272022022703700000 0001069183 2019-01-01 2019-09-30 0001069183 2019-10-31 0001069183 2018-12-31 0001069183 2019-09-30 0001069183 aaxn:CustomerDepositsMember 2018-12-31 0001069183 aaxn:CurrentPortionofDeferredRevenueMember 2019-09-30 0001069183 aaxn:CustomerDepositsMember 2019-09-30 0001069183 aaxn:CurrentPortionofDeferredRevenueMember 2018-12-31 0001069183 2019-07-01 2019-09-30 0001069183 2018-07-01 2018-09-30 0001069183 2018-01-01 2018-09-30 0001069183 us-gaap:ServiceMember 2019-01-01 2019-09-30 0001069183 us-gaap:ProductMember 2018-01-01 2018-09-30 0001069183 us-gaap:ProductMember 2018-07-01 2018-09-30 0001069183 us-gaap:ProductMember 2019-01-01 2019-09-30 0001069183 us-gaap:ServiceMember 2018-07-01 2018-09-30 0001069183 us-gaap:ServiceMember 2019-07-01 2019-09-30 0001069183 us-gaap:ServiceMember 2018-01-01 2018-09-30 0001069183 us-gaap:ProductMember 2019-07-01 2019-09-30 0001069183 us-gaap:RetainedEarningsMember 2019-03-31 0001069183 us-gaap:RetainedEarningsMember 2019-09-30 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0001069183 us-gaap:RetainedEarningsMember 2019-06-30 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001069183 us-gaap:TreasuryStockMember 2019-06-30 0001069183 us-gaap:TreasuryStockMember 2019-09-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001069183 2019-01-01 2019-03-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001069183 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001069183 2019-04-01 2019-06-30 0001069183 us-gaap:CommonStockMember 2018-12-31 0001069183 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001069183 2019-06-30 0001069183 us-gaap:CommonStockMember 2019-09-30 0001069183 us-gaap:TreasuryStockMember 2018-12-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001069183 us-gaap:CommonStockMember 2019-06-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001069183 us-gaap:RetainedEarningsMember 2018-12-31 0001069183 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001069183 us-gaap:TreasuryStockMember 2019-03-31 0001069183 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001069183 us-gaap:CommonStockMember 2019-03-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001069183 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0001069183 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001069183 2019-03-31 0001069183 2018-01-01 2018-03-31 0001069183 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0001069183 us-gaap:TreasuryStockMember 2018-06-30 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0001069183 2018-03-31 0001069183 2018-06-30 0001069183 us-gaap:CommonStockMember 2018-03-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001069183 us-gaap:TreasuryStockMember 2017-12-31 0001069183 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001069183 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0001069183 2018-04-01 2018-06-30 0001069183 us-gaap:RetainedEarningsMember 2018-03-31 0001069183 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001069183 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001069183 us-gaap:CommonStockMember 2018-09-30 0001069183 2017-12-31 0001069183 us-gaap:TreasuryStockMember 2018-09-30 0001069183 us-gaap:CommonStockMember 2017-12-31 0001069183 us-gaap:CommonStockMember 2018-06-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001069183 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0001069183 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0001069183 2018-09-30 0001069183 us-gaap:RetainedEarningsMember 2018-06-30 0001069183 us-gaap:RetainedEarningsMember 2017-12-31 0001069183 us-gaap:TreasuryStockMember 2018-03-31 0001069183 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0001069183 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0001069183 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0001069183 us-gaap:RetainedEarningsMember 2018-09-30 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0001069183 us-gaap:RetainedEarningsMember 2018-01-01 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001069183 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001069183 2018-01-01 0001069183 2019-01-01 0001069183 us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0001069183 aaxn:EnterpriseResourcePlanningSystemMember 2019-07-01 2019-09-30 0001069183 aaxn:DesignofNewHeadquartersMember 2019-07-01 2019-09-30 0001069183 us-gaap:OtherCurrentAssetsMember 2019-09-30 0001069183 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2019-09-30 0001069183 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2018-12-31 0001069183 us-gaap:OtherCurrentAssetsMember 2018-12-31 0001069183 srt:MaximumMember 2019-10-01 2019-09-30 0001069183 srt:MaximumMember 2020-10-01 2019-09-30 0001069183 srt:MinimumMember 2019-10-01 2019-09-30 0001069183 2019-09-30 0001069183 aaxn:TaserWeaponsSegmentMember 2018-12-31 0001069183 aaxn:SoftwareandSensorsSegmentMember 2019-09-30 0001069183 aaxn:SoftwareandSensorsSegmentMember 2018-12-31 0001069183 aaxn:TaserWeaponsSegmentMember 2019-09-30 0001069183 country:US 2018-07-01 2018-09-30 0001069183 us-gaap:NonUsMember 2018-07-01 2018-09-30 0001069183 us-gaap:NonUsMember us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2019-07-01 2019-09-30 0001069183 country:US us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2019-01-01 2019-09-30 0001069183 us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2018-01-01 2018-09-30 0001069183 us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2019-01-01 2019-09-30 0001069183 country:US 2018-01-01 2018-09-30 0001069183 country:US us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2018-07-01 2018-09-30 0001069183 country:US us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2018-01-01 2018-09-30 0001069183 us-gaap:NonUsMember us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2018-07-01 2018-09-30 0001069183 us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2019-07-01 2019-09-30 0001069183 us-gaap:NonUsMember us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2019-01-01 2019-09-30 0001069183 us-gaap:NonUsMember 2018-01-01 2018-09-30 0001069183 us-gaap:NonUsMember 2019-01-01 2019-09-30 0001069183 country:US 2019-01-01 2019-09-30 0001069183 us-gaap:NonUsMember 2019-07-01 2019-09-30 0001069183 us-gaap:NonUsMember us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2018-01-01 2018-09-30 0001069183 country:US us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2019-07-01 2019-09-30 0001069183 country:US 2019-07-01 2019-09-30 0001069183 us-gaap:RevenueFromContractWithCustomerMember us-gaap:GeographicConcentrationRiskMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX2Member aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonFleetMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonBodyMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERX2Member aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERX26PMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASER7Member aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:OtherMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonFleetMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERCamMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERPulseAndBoltMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonEvidenceMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonBodyMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonFlexMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERPulseAndBoltMember 2018-01-01 2018-09-30 0001069183 aaxn:SingleCartridgesMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERX26PMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember 2019-01-01 2019-09-30 0001069183 aaxn:TASER7Member aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASER7Member 2018-01-01 2018-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonBodyMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERX26PMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonBodyMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:OtherMember 2018-01-01 2018-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERCamMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERCamMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERX2Member aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonFleetMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERX2Member 2018-01-01 2018-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonFlexMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonBodyMember 2018-01-01 2018-09-30 0001069183 aaxn:OtherMember 2019-01-01 2019-09-30 0001069183 aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonDockMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonDockMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonFlexMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonFlexMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:OtherMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember 2018-01-01 2018-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:OtherMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:SingleCartridgesMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonBodyMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERCamMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERX2Member aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonFleetMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonEvidenceMember 2018-01-01 2018-09-30 0001069183 aaxn:TASER7Member 2019-01-01 2019-09-30 0001069183 aaxn:TASER7Member aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonDockMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERCamMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERX26PMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonFlexMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonDockMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERCamMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:TASERX26PMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASER7Member aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:OtherMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonFleetMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERX2Member 2019-01-01 2019-09-30 0001069183 aaxn:AxonFleetMember 2019-01-01 2019-09-30 0001069183 aaxn:TASERX26PMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonFlexMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonDockMember 2019-01-01 2019-09-30 0001069183 aaxn:AxonDockMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonFlexMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonFleetMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonEvidenceMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonFlexMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERX26PMember 2019-07-01 2019-09-30 0001069183 aaxn:TASER7Member 2018-07-01 2018-09-30 0001069183 aaxn:AxonBodyMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERPulseAndBoltMember 2019-07-01 2019-09-30 0001069183 aaxn:OtherMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX26PMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASER7Member 2019-07-01 2019-09-30 0001069183 aaxn:TASER7Member aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonFlexMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonBodyMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:OtherMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:SingleCartridgesMember 2018-07-01 2018-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonFleetMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERCamMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERPulseAndBoltMember 2018-07-01 2018-09-30 0001069183 aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonFleetMember 2018-07-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERCamMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERCamMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonEvidenceMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonDockMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASER7Member aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:ExtendedWarrantiesMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX2Member 2018-07-01 2018-09-30 0001069183 aaxn:AxonDockMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX26PMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX26PMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERX2Member aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonDockMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonFleetMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:OtherMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX26PMember 2018-07-01 2018-09-30 0001069183 aaxn:TASER7Member aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERCamMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX2Member aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonBodyMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASER7Member aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:OtherMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonFlexMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERCamMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonBodyMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonDockMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonFleetMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonFlexMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:OtherMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonBodyMember 2019-07-01 2019-09-30 0001069183 aaxn:SingleCartridgesMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonFleetMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonFlexMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonBodyMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonEvidenceMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERCamMember 2018-07-01 2018-09-30 0001069183 aaxn:TASERX2Member 2019-07-01 2019-09-30 0001069183 aaxn:TASERPulseAndBoltMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:AxonDockMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERX2Member aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERX26PMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:AxonDockMember 2018-07-01 2018-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:TASERX2Member aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:OtherMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:ExtendedWarrantiesMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 aaxn:SingleCartridgesMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 aaxn:HardwareEquipmentMember aaxn:SoftwareandSensorsSegmentMember 2018-12-31 0001069183 aaxn:WarrantyMember 2018-12-31 0001069183 aaxn:SoftwareAndSensorsServicesMember 2018-12-31 0001069183 aaxn:WarrantyMember 2019-09-30 0001069183 aaxn:HardwareEquipmentMember 2019-09-30 0001069183 aaxn:SoftwareAndSensorsServicesMember aaxn:SoftwareandSensorsSegmentMember 2018-12-31 0001069183 aaxn:SoftwareAndSensorsServicesMember aaxn:TaserWeaponsSegmentMember 2018-12-31 0001069183 aaxn:WarrantyMember aaxn:SoftwareandSensorsSegmentMember 2018-12-31 0001069183 aaxn:WarrantyMember aaxn:SoftwareandSensorsSegmentMember 2019-09-30 0001069183 aaxn:HardwareEquipmentMember aaxn:SoftwareandSensorsSegmentMember 2019-09-30 0001069183 aaxn:HardwareEquipmentMember aaxn:TaserWeaponsSegmentMember 2018-12-31 0001069183 aaxn:HardwareEquipmentMember 2018-12-31 0001069183 aaxn:SoftwareAndSensorsServicesMember aaxn:SoftwareandSensorsSegmentMember 2019-09-30 0001069183 aaxn:HardwareEquipmentMember aaxn:TaserWeaponsSegmentMember 2019-09-30 0001069183 aaxn:SoftwareAndSensorsServicesMember aaxn:TaserWeaponsSegmentMember 2019-09-30 0001069183 aaxn:SoftwareAndSensorsServicesMember 2019-09-30 0001069183 aaxn:WarrantyMember aaxn:TaserWeaponsSegmentMember 2019-09-30 0001069183 aaxn:WarrantyMember aaxn:TaserWeaponsSegmentMember 2018-12-31 0001069183 srt:MinimumMember 2020-10-01 2019-09-30 0001069183 us-gaap:CashMember 2019-09-30 0001069183 us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel2Member 2019-09-30 0001069183 aaxn:AgencyBondsMember us-gaap:FairValueInputsLevel1Member 2018-09-30 0001069183 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2018-09-30 0001069183 us-gaap:FairValueInputsLevel1Member 2019-09-30 0001069183 aaxn:AgencyBondsMember us-gaap:FairValueInputsLevel1Member 2019-09-30 0001069183 us-gaap:CorporateBondSecuritiesMember us-gaap:FairValueInputsLevel2Member 2019-09-30 0001069183 us-gaap:FairValueInputsLevel2Member 2019-09-30 0001069183 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2019-09-30 0001069183 us-gaap:FairValueInputsLevel2Member 2018-09-30 0001069183 us-gaap:CorporateBondSecuritiesMember us-gaap:FairValueInputsLevel2Member 2018-09-30 0001069183 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member 2018-09-30 0001069183 us-gaap:USStatesAndPoliticalSubdivisionsMember us-gaap:FairValueInputsLevel2Member 2019-09-30 0001069183 us-gaap:USTreasurySecuritiesMember us-gaap:FairValueInputsLevel2Member 2018-09-30 0001069183 us-gaap:FairValueInputsLevel1Member 2018-09-30 0001069183 us-gaap:CashMember 2018-09-30 0001069183 us-gaap:MoneyMarketFundsMember us-gaap:FairValueInputsLevel1Member 2018-12-31 0001069183 us-gaap:CashMember 2018-12-31 0001069183 us-gaap:CustomerRelationshipsMember 2018-12-31 0001069183 us-gaap:DevelopedTechnologyRightsMember 2018-12-31 0001069183 us-gaap:DevelopedTechnologyRightsMember 2019-09-30 0001069183 us-gaap:TrademarksMember 2019-09-30 0001069183 us-gaap:NoncompeteAgreementsMember 2018-12-31 0001069183 us-gaap:InternetDomainNamesMember 2019-09-30 0001069183 aaxn:PatentsAndTrademarksPendingMember 2018-12-31 0001069183 us-gaap:DistributionRightsMember 2019-09-30 0001069183 us-gaap:NoncompeteAgreementsMember 2019-09-30 0001069183 aaxn:PatentsAndTrademarksPendingMember 2019-09-30 0001069183 us-gaap:TrademarksMember 2018-12-31 0001069183 us-gaap:CustomerRelationshipsMember 2019-09-30 0001069183 aaxn:TaserTrademarkMember 2018-12-31 0001069183 us-gaap:PatentsMember 2019-09-30 0001069183 us-gaap:InternetDomainNamesMember 2018-12-31 0001069183 us-gaap:PatentsMember 2018-12-31 0001069183 us-gaap:DistributionRightsMember 2018-12-31 0001069183 aaxn:TaserTrademarkMember 2019-09-30 0001069183 us-gaap:DistributionRightsMember 2019-01-01 2019-09-30 0001069183 srt:MinimumMember us-gaap:TrademarksMember 2019-01-01 2019-09-30 0001069183 srt:MaximumMember us-gaap:DevelopedTechnologyRightsMember 2019-01-01 2019-09-30 0001069183 srt:MaximumMember us-gaap:TrademarksMember 2019-01-01 2019-09-30 0001069183 srt:MinimumMember us-gaap:InternetDomainNamesMember 2019-01-01 2019-09-30 0001069183 srt:MaximumMember us-gaap:InternetDomainNamesMember 2019-01-01 2019-09-30 0001069183 srt:MinimumMember us-gaap:NoncompeteAgreementsMember 2019-01-01 2019-09-30 0001069183 srt:MaximumMember us-gaap:CustomerRelationshipsMember 2019-01-01 2019-09-30 0001069183 srt:MinimumMember us-gaap:DevelopedTechnologyRightsMember 2019-01-01 2019-09-30 0001069183 srt:MinimumMember us-gaap:PatentsMember 2019-01-01 2019-09-30 0001069183 srt:MinimumMember us-gaap:CustomerRelationshipsMember 2019-01-01 2019-09-30 0001069183 srt:MaximumMember us-gaap:NoncompeteAgreementsMember 2019-01-01 2019-09-30 0001069183 srt:MaximumMember us-gaap:PatentsMember 2019-01-01 2019-09-30 0001069183 us-gaap:DomesticCountryMember 2019-09-30 0001069183 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-09-30 0001069183 us-gaap:StateAndLocalJurisdictionMember 2019-09-30 0001069183 us-gaap:EmployeeStockOptionMember 2019-09-30 0001069183 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-09-30 0001069183 us-gaap:EmployeeStockOptionMember 2018-12-31 0001069183 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-01-01 2019-09-30 0001069183 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-07-01 2018-09-30 0001069183 us-gaap:CostOfSalesMember 2018-07-01 2018-09-30 0001069183 us-gaap:ResearchAndDevelopmentExpenseMember 2019-07-01 2019-09-30 0001069183 us-gaap:CostOfSalesMember 2018-01-01 2018-09-30 0001069183 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2018-01-01 2018-09-30 0001069183 us-gaap:CostOfSalesMember 2019-01-01 2019-09-30 0001069183 us-gaap:ResearchAndDevelopmentExpenseMember 2019-01-01 2019-09-30 0001069183 us-gaap:ResearchAndDevelopmentExpenseMember 2018-01-01 2018-09-30 0001069183 us-gaap:SellingGeneralAndAdministrativeExpensesMember 2019-07-01 2019-09-30 0001069183 us-gaap:ResearchAndDevelopmentExpenseMember 2018-07-01 2018-09-30 0001069183 us-gaap:CostOfSalesMember 2019-07-01 2019-09-30 0001069183 aaxn:A2019eXponentialStockPerformancePlanMember 2019-01-01 2019-09-30 0001069183 aaxn:PerformanceBasedRestrictedStockUnitMember 2019-01-01 2019-09-30 0001069183 2018-05-24 2018-05-24 0001069183 us-gaap:PerformanceSharesMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-09-30 0001069183 aaxn:A2016StockIncentivePlanMember 2019-09-30 0001069183 srt:MinimumMember aaxn:EXponentialStockUnitsMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-09-30 0001069183 srt:ChiefExecutiveOfficerMember 2019-09-30 0001069183 srt:MaximumMember 2019-09-30 0001069183 aaxn:EXponentialStockUnitsMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-01-01 2019-09-30 0001069183 aaxn:A2019InducementPlanMember 2019-09-30 0001069183 srt:MinimumMember 2019-09-30 0001069183 aaxn:A2016StockIncentivePlanMember 2016-02-29 0001069183 aaxn:ServiceBasedRestrictedStockUnitMember 2019-01-01 2019-09-30 0001069183 aaxn:EXponentialStockUnitsMember 2019-01-01 2019-09-30 0001069183 srt:MaximumMember aaxn:PerformanceBasedRestrictedStockUnitMember 2019-01-01 2019-09-30 0001069183 aaxn:EXponentialStockUnitsMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-02-12 2019-02-12 0001069183 srt:MinimumMember aaxn:EXponentialStockUnitsMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-01-01 2019-09-30 0001069183 srt:ChiefExecutiveOfficerMember 2018-05-24 2018-05-24 0001069183 us-gaap:RestrictedStockMember 2019-01-01 2019-09-30 0001069183 aaxn:PerformanceBasedRestrictedStockUnitMember 2019-09-30 0001069183 srt:MaximumMember aaxn:EXponentialStockUnitsMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-01-01 2019-09-30 0001069183 us-gaap:RestrictedStockMember 2019-09-30 0001069183 us-gaap:PerformanceSharesMember 2018-05-24 2018-05-24 0001069183 srt:MaximumMember aaxn:EXponentialStockUnitsMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-09-30 0001069183 us-gaap:EmployeeStockOptionMember 2018-01-01 2018-09-30 0001069183 us-gaap:PerformanceSharesMember 2019-09-30 0001069183 aaxn:A2019StockIncentivePlanMember 2019-02-28 0001069183 aaxn:EXponentialStockUnitsMember aaxn:A2019eXponentialStockPerformancePlanMember 2019-09-30 0001069183 aaxn:A2016StockIncentivePlanMember 2019-01-01 2019-09-30 0001069183 aaxn:EXponentialStockUnitsMember 2019-01-01 2019-01-31 0001069183 aaxn:A2019StockIncentivePlanMember 2019-09-30 0001069183 srt:MinimumMember aaxn:PerformanceBasedRestrictedStockUnitMember 2019-01-01 2019-09-30 0001069183 us-gaap:RestrictedStockMember 2018-12-31 0001069183 aaxn:A2016StockIncentivePlanMember 2018-01-01 2018-09-30 0001069183 us-gaap:LetterOfCreditMember us-gaap:LineOfCreditMember 2019-09-30 0001069183 srt:MaximumMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001069183 srt:MinimumMember us-gaap:LineOfCreditMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001069183 aaxn:UnsecuredRevolvingLineofCreditMember us-gaap:LineOfCreditMember 2019-09-30 0001069183 us-gaap:LineOfCreditMember 2019-09-30 0001069183 us-gaap:LineOfCreditMember 2019-01-01 2019-09-30 0001069183 us-gaap:LineOfCreditMember 2018-12-31 0001069183 srt:MaximumMember 2019-01-01 2019-09-30 0001069183 2017-01-01 2017-12-31 0001069183 2018-01-01 2018-12-31 0001069183 srt:MinimumMember 2019-01-01 2019-09-30 0001069183 us-gaap:SuretyBondMember 2019-09-30 0001069183 us-gaap:LeaseAgreementsMember 2018-12-13 0001069183 us-gaap:CapacityMember 2019-07-01 2019-07-31 0001069183 aaxn:ExpiringinTwoThousandTwentyThreeMember us-gaap:SuretyBondMember 2019-09-30 0001069183 aaxn:ExpiringinTwoThousandTwentyTwoMember us-gaap:SuretyBondMember 2019-09-30 0001069183 aaxn:ExpiringinTwoThousandTwentyOneMember us-gaap:SuretyBondMember 2019-09-30 0001069183 us-gaap:CapacityMember 2019-07-01 2019-09-30 0001069183 aaxn:ExpiringinTwoThousandTwentyFourMember us-gaap:SuretyBondMember 2019-09-30 0001069183 aaxn:ExpiringinTwoThousandTwentyMember us-gaap:SuretyBondMember 2019-09-30 0001069183 us-gaap:LeaseAgreementsMember 2018-12-13 2018-12-13 0001069183 us-gaap:CapacityMember 2019-06-30 0001069183 us-gaap:CapacityMember 2019-06-01 2019-06-30 0001069183 us-gaap:CapacityMember 2019-01-01 2019-09-30 0001069183 aaxn:SoftwareLicensingandSubscriptionMember srt:OfficerMember 2019-07-01 2019-09-30 0001069183 aaxn:SoftwareLicensingandSubscriptionMember srt:OfficerMember 2018-01-01 2018-09-30 0001069183 aaxn:SoftwareLicensingandSubscriptionMember srt:OfficerMember 2018-07-01 2018-09-30 0001069183 aaxn:SoftwareLicensingandSubscriptionMember srt:OfficerMember 2019-01-01 2019-09-30 0001069183 aaxn:ServiceInstallationCostsMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 aaxn:ServiceInstallationCostsMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 us-gaap:ServiceMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 us-gaap:ServiceMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 us-gaap:ProductMember aaxn:TaserWeaponsSegmentMember 2019-07-01 2019-09-30 0001069183 us-gaap:ServiceMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 us-gaap:ProductMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 us-gaap:ServiceMember aaxn:TaserWeaponsSegmentMember 2018-07-01 2018-09-30 0001069183 us-gaap:ProductMember aaxn:SoftwareandSensorsSegmentMember 2018-07-01 2018-09-30 0001069183 us-gaap:ProductMember aaxn:SoftwareandSensorsSegmentMember 2019-07-01 2019-09-30 0001069183 us-gaap:ProductMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 0001069183 us-gaap:ProductMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 us-gaap:ServiceMember aaxn:SoftwareandSensorsSegmentMember 2018-01-01 2018-09-30 0001069183 us-gaap:ProductMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 us-gaap:ServiceMember aaxn:TaserWeaponsSegmentMember 2019-01-01 2019-09-30 0001069183 us-gaap:ProductMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 us-gaap:ServiceMember aaxn:TaserWeaponsSegmentMember 2018-01-01 2018-09-30 0001069183 us-gaap:ServiceMember aaxn:SoftwareandSensorsSegmentMember 2019-01-01 2019-09-30 xbrli:pure iso4217:USD aaxn:segment iso4217:USD xbrli:shares xbrli:shares aaxn:lawsuit aaxn:tranche

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-16391
Axon Enterprise, Inc.
(Exact name of registrant as specified in its charter)
Delaware
 
86-0741227
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
17800 North 85th Street
 
85255
Scottsdale
,
Arizona
 
 
 
(Address of principal executive offices)
 
 
(Zip Code)
(480) 991-0797
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.00001 Par Value
AAXN
The Nasdaq Global Select Market
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
Accelerated filer
 

 
 
 
 
Non-accelerated Filer
 
 
Smaller reporting company
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  
The number of shares of the registrant’s common stock outstanding as of October 31, 2019 was 59,340,965.
 



AXON ENTERPRISE, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019
 
 
 
 
Page
 
 
 
 

ii
 
 
 
 
 
 
1
 
 
1
 
 
2
 
 
3
 
 
5
 
 
6
 
24
 
39
 
39
 
 
40
 
40
 
40
 
40
 
40
 
40
 
41
 
42




Special Note Regarding Forward-Looking Statements

This Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding our expectations, beliefs, intentions and strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. From time to time, we also provide forward-looking statements in other materials we release to the public as well as verbal forward-looking statements. These forward-looking statements include, without limitation, statements regarding: proposed products and services and related development efforts and activities; expectations about the market for our current and future products and services; the impact of pending litigation; our outlook for 2019 with respect to revenue, stock compensation expense, and income tax rate; trends relating to subscription plan programs and revenues; our anticipation that contracts with governmental customers will be fulfilled; expected trends, including the benefits of, research and development investments; the sufficiency of our liquidity and financial resources; that we may repurchase our common stock; expectations about customer behavior; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; statements of management’s strategies, goals and objectives and other similar expressions; as well as the ultimate resolution of financial statement items requiring critical accounting estimates, including those set forth in our Form 10-K for the year ended December 31, 2018. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as “may,” “will,” “should,” “could,” “would,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” and similar expressions, as well as statements in future tense, identify forward-looking statements. However, not all forward-looking statements contain these identifying words.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. The following important factors could cause actual results to differ materially from those in the forward-looking statements: customer purchase behavior, including adoption of our software as a service delivery model; the impact of product mix on projected gross margins; our ability to manage our supply chain and avoid production delays, shortages, and impacts to expected gross margins; changes in the costs of product components and labor; defects in our products; delayed cash collections and possible credit losses due to our subscription model; exposure to international operational risks; our ability to design, introduce and sell new products or features; our ability to defend against litigation and protect our intellectual property, and the resulting costs of this activity; our exposure to cancellations of government contracts due to appropriation clauses, exercise of a cancellation clause, or non-exercise of contractually optional periods; loss of customer data, a breach of security or an extended outage, including our reliance on third party cloud-based storage providers; negative media publicity regarding our products; changes in government regulations in the U.S. and in foreign markets, especially related to the classification of our product by the United States Bureau of Alcohol, Tobacco, Firearms and Explosives and to evolving regulations surrounding privacy and data protection; our ability to integrate acquired businesses; our ability to attract and retain key personnel; and counter-party risks relating to cash balances held in excess of FDIC insurance limits. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements. The Annual Report on Form 10-K that we filed with the Securities and Exchange Commission ("SEC") on February 27, 2019 listed various important factors that could cause actual results to differ materially from expected and historical results. These factors are intended as cautionary statements for investors within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act. Readers can find them under the heading “Risk Factors” in the Report on Form 10-K and in this Report on Form 10-Q, and investors should refer to them. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports to the SEC. Our filings with the SEC may be accessed at the SEC’s web site at www.sec.gov.


ii


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AXON ENTERPRISE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
September 30, 2019
 
December 31, 2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
202,551

 
$
349,462

Short-term investments
108,913

 

Accounts and notes receivable, net of allowance of $1,983 and $1,882 as of September 30, 2019 and December 31, 2018, respectively
149,013

 
130,579

Contract assets, net
33,602

 
13,960

Inventory
40,666

 
33,763

Prepaid expenses and other current assets
41,277

 
30,391

Total current assets
576,022

 
558,155

Property and equipment, net of accumulated depreciation of $38,470 and $39,885 as of September 30, 2019 and December 31, 2018, respectively
42,592

 
37,893

Deferred income tax assets, net
23,290

 
19,347

Intangible assets, net
13,528

 
15,935

Goodwill
24,876

 
24,981

Long-term investments
41,391

 

Long-term notes receivable, net of current portion
33,463

 
40,230

Other assets
37,142

 
22,999

Total assets
$
792,304

 
$
719,540

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
14,638

 
$
15,164

Accrued liabilities
35,745

 
41,092

Current portion of deferred revenue
127,160

 
107,016

Customer deposits
2,294

 
2,702

Other current liabilities
3,997

 
37

Total current liabilities
183,834

 
166,011

Deferred revenue, net of current portion
82,149

 
74,417

Liability for unrecognized tax benefits
3,443

 
2,849

Long-term deferred compensation
3,694

 
3,235

Other long-term liabilities
11,537

 
5,704

Total liabilities
284,657

 
252,216

Commitments and contingencies (Note 12)

 

Stockholders’ equity:
 
 
 
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of September 30, 2019 and December 31, 2018

 

Common stock, $0.00001 par value; 200,000,000 shares authorized; 59,320,793 and 58,810,637 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively
1

 
1

Additional paid-in capital
480,747

 
453,400

Treasury stock at cost, 20,220,227 shares as of September 30, 2019 and December 31, 2018
(155,947
)
 
(155,947
)
Retained earnings
184,644

 
171,383

Accumulated other comprehensive loss
(1,798
)
 
(1,513
)
Total stockholders’ equity
507,647

 
467,324

Total liabilities and stockholders’ equity
$
792,304

 
$
719,540

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


AXON ENTERPRISE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(in thousands, except per share data)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
Net sales from products
$
96,497

 
$
80,923

 
$
264,977

 
$
238,618

Net sales from services
34,340

 
23,913

 
94,032

 
66,659

Net sales
130,837

 
104,836

 
359,009

 
305,277

Cost of product sales
42,445

 
32,953

 
120,265

 
96,474

Cost of service sales
8,223

 
6,250

 
24,098

 
15,566

Cost of sales
50,668

 
39,203

 
144,363

 
112,040

Gross margin
80,169

 
65,633

 
214,646

 
193,237

Operating expenses:
 
 
 
 
 
 
 
Sales, general and administrative
48,424

 
39,685

 
134,678

 
114,787

Research and development
25,129

 
21,982

 
71,976

 
55,602

Total operating expenses
73,553

 
61,667

 
206,654

 
170,389

Income from operations
6,616

 
3,966

 
7,992

 
22,848

Interest and other income (expense), net
1,820

 
1,274

 
5,978

 
2,242

Income before provision for income taxes
8,436

 
5,240

 
13,970

 
25,090

Provision for (benefit from) income taxes
2,332

 
(471
)
 
709

 
(2,032
)
Net income
$
6,104

 
$
5,711

 
$
13,261

 
$
27,122

Net income per common and common equivalent shares:
 
 
 
 
 
 
 
Basic
$
0.10

 
$
0.10

 
$
0.22

 
$
0.49

Diluted
$
0.10

 
$
0.10

 
$
0.22

 
$
0.47

Weighted average number of common and common equivalent shares outstanding:
 
 
 
 
 
 
 
Basic
59,278

 
58,340

 
59,128

 
55,681

Diluted
60,059

 
59,805

 
59,938

 
57,254

 
 
 
 
 
 
 
 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income
$
6,104

 
$
5,711

 
$
13,261

 
$
27,122

Foreign currency translation adjustments
(227
)
 
(107
)
 
(285
)
 
(159
)
Comprehensive income
$
5,877

 
$
5,604

 
$
12,976

 
$
26,963


The accompanying notes are an integral part of these condensed consolidated financial statements.


2


AXON ENTERPRISE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except per share data)
 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total
Stockholders’
Equity
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
Balance, December 31, 2018
58,810,637

 
$
1

 
$
453,400

 
20,220,227

 
$
(155,947
)
 
$
171,383

 
$
(1,513
)
 
$
467,324

Issuance of common stock under employee plans, net
298,649

 

 
(1,159
)
 

 

 

 

 
(1,159
)
Stock-based compensation

 

 
7,905

 

 

 

 

 
7,905

Net income

 

 

 

 

 
6,419

 

 
6,419

Foreign currency translation adjustments

 

 

 

 

 

 
50

 
50

Balance, March 31, 2019
59,109,286

 
1

 
460,146

 
20,220,227

 
(155,947
)
 
177,802

 
(1,463
)
 
480,539

Issuance of common stock under employee plans, net
71,832

 

 
(869
)
 

 

 

 

 
(869
)
Stock-based compensation

 

 
8,627

 

 

 

 

 
8,627

Issuance of common stock for business combination contingent consideration
70,613

 

 

 

 

 

 

 

Net income

 

 

 

 

 
738

 

 
738

Foreign currency translation adjustments

 

 

 

 

 

 
(108
)
 
(108
)
Balance, June 30, 2019
59,251,731

 
1

 
467,904

 
20,220,227

 
(155,947
)
 
178,540

 
(1,571
)
 
488,927

Issuance of common stock under employee plans, net
69,062

 

 
(1,134
)
 

 

 

 

 
(1,134
)
Stock-based compensation

 

 
13,977

 

 

 

 

 
13,977

Net income

 

 

 

 

 
6,104

 

 
6,104

Foreign currency translation adjustments

 

 

 

 

 

 
(227
)
 
(227
)
Balance, September 30, 2019
59,320,793

 
$
1

 
$
480,747

 
20,220,227

 
$
(155,947
)
 
$
184,644

 
$
(1,798
)
 
$
507,647



3


 
Common Stock
 
Additional
Paid-in
Capital
 
Treasury Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Total
Stockholders’
Equity
 
Shares
 
Amount
 
 
Shares
 
Amount
 
 
 
Balance, December 31, 2017
52,969,869

 
$
1

 
$
201,672

 
20,220,227

 
$
(155,947
)
 
$
123,185

 
$
(1,467
)
 
$
167,444

Cumulative effect of applying a change in accounting principle

 

 

 

 

 
18,994

 

 
18,994

Issuance of common stock under employee plans, net
337,214

 

 
(3,421
)
 

 

 

 

 
(3,421
)
Stock-based compensation

 

 
4,093

 

 

 

 

 
4,093

Net income

 

 

 

 

 
12,926

 

 
12,926

Foreign currency translation adjustments

 

 

 

 

 

 
(707
)
 
(707
)
Balance, March 31, 2018
53,307,083

 
1

 
202,344

 
20,220,227

 
(155,947
)
 
155,105

 
(2,174
)
 
199,329

Issuance of common stock
4,645,000

 

 
233,993

 

 

 

 

 
233,993

Issuance of common stock for business combination
58,843

 

 
8,226

 

 

 

 

 
8,226

Issuance of common stock under employee plans, net
278,687

 

 
(6,800
)
 





 

 
(6,800
)
Stock-based compensation

 

 
4,954

 





 

 
4,954

Net income

 

 

 




8,485

 

 
8,485

Foreign currency translation adjustments

 

 

 

 

 

 
655

 
655

Balance, June 30, 2018
58,289,613

 
1

 
442,717

 
20,220,227

 
(155,947
)
 
163,590

 
(1,519
)
 
448,842

Issuance of common stock under employee plans
130,129

 

 
(1,039
)
 

 

 

 

 
(1,039
)
Stock-based compensation

 

 
6,255

 

 

 

 

 
6,255

Net income

 

 

 

 

 
5,711

 

 
5,711

Foreign currency translation adjustments

 

 

 

 

 

 
(107
)
 
(107
)
Balance, September 30, 2018
58,419,742

 
$
1

 
$
447,933

 
20,220,227

 
$
(155,947
)
 
$
169,301

 
$
(1,626
)
 
$
459,662


The accompanying notes are an integral part of these condensed consolidated financial statements.

4


AXON ENTERPRISE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Nine Months Ended September 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net income
$
13,261

 
$
27,122

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
8,196

 
8,226

Loss on disposal and impairment of property and equipment, net
2,408

 
290

Loss on disposal and abandonment of intangible assets
51

 
2,103

Stock-based compensation
30,195

 
15,302

Deferred income taxes
(3,946
)
 
(2,326
)
Unrecognized tax benefits
594

 
99

Other noncash, net
2,923

 
34

Change in assets and liabilities:
 
 
 
Accounts and notes receivable and contract assets
(30,497
)
 
(51,172
)
Inventory
(6,302
)
 
9,033

Prepaid expenses and other assets
(11,967
)
 
(12,081
)
Accounts payable, accrued and other liabilities
(13,528
)
 
4,306

Deferred revenue
28,476

 
31,700

Net cash provided by operating activities
19,864

 
32,636

Cash flows from investing activities:
 
 
 
Purchases of investments
(242,693
)
 
(4,331
)
Proceeds from maturity/call of investments
92,207

 
10,658

Purchases of property and equipment
(12,111
)
 
(6,880
)
Purchases of intangible assets
(328
)
 
(460
)
Business acquisitions

 
(4,990
)
Net cash used in investing activities
(162,925
)
 
(6,003
)
Cash flows from financing activities:
 
 
 
Net proceeds from equity offering

 
233,993

Proceeds from options exercised
106

 
713

Income and payroll tax payments for net-settled stock awards
(3,268
)
 
(11,973
)
Payment of contingent consideration for a business acquisition

 
(575
)
Net cash provided by (used in) financing activities
(3,162
)
 
222,158

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(678
)
 
(381
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(146,901
)
 
248,410

Cash, cash equivalents and restricted cash, beginning of period
351,027

 
78,438

Cash, cash equivalents and restricted cash, end of period
$
204,126

 
$
326,848

 
 
 
 
Supplemental disclosures:
 
 
 
Cash and cash equivalents
$
202,551

 
$
324,371

Restricted cash (Note 1)
1,575

 
2,477

Total cash, cash equivalents and restricted cash shown in the statements of cash flows
$
204,126

 
$
326,848

 
 
 
 
Cash paid for income taxes, net of refunds
$
2,422

 
$
7,957

 
 
 
 
Non-cash transactions
 
 
 
Property and equipment purchases in accounts payable and accrued liabilities
$
1,047

 
$
1,114

Non-cash purchase consideration related to business combinations
$

 
$
12,508

Commission converted to stock-based award
$
314

 
$

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

AXON ENTERPRISE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1. Organization and Summary of Significant Accounting Policies
Axon Enterprise, Inc. (“Axon,” the “Company,” "we," or "us") is a market-leading provider of law enforcement technology solutions. Our core mission is to protect life. We fulfill that mission through developing hardware and software products that advance the long term objectives of a) obsoleting the bullet, b) reducing social conflict, and c) enabling a fair and effective justice system.

Our headquarters in Scottsdale, Arizona houses our executive management, sales, marketing, certain engineering, manufacturing, and other administrative support functions. We also have a software engineering development center located in Seattle, Washington, and subsidiaries located in Australia, Canada, Finland, Hong Kong, Germany, India, Italy, the Netherlands, the United Kingdom, and Vietnam.
The accompanying unaudited condensed consolidated financial statements include the accounts of Axon Enterprise, Inc. and our wholly owned subsidiaries. All material intercompany accounts, transactions, and profits have been eliminated.
Basis of Presentation and Use of Estimates
These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2018, as filed on Form 10-K, with the exception of our adoption of certain accounting pronouncements which we describe below. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2018. The results of operations for the three and nine months ended September 30, 2019 and 2018 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,
valuation of goodwill, intangible and long-lived assets,
recognition, measurement and valuation of current and deferred income taxes,
stock-based compensation,
recognition and measurement of lease liabilities,
recognition and measurement of contingencies and accrued litigation expense, and
fair values of identified tangible and intangible assets acquired and liabilities assumed in business combinations.
Actual results could differ materially from those estimates.
Segment Information
Our operations are comprised of two reportable segments: the manufacture and sale of conducted electrical weapons ("CEWs"), batteries, accessories, extended warranties and other products and services (the “TASER” segment); and the development, manufacture, and sale of software and sensors, which includes the sale of devices, wearables, applications, cloud and mobile products (collectively, the “Software and Sensors” segment). Revenue from our “products” in the Software and Sensors segment are generally from sales of sensors, including on-officer body cameras, Axon Fleet cameras, other hardware sensors, warranties on sensors, and other products, and is sometimes referred to as "Sensors and Other revenue." Revenue from our “services” in the Software and Sensors segment consist of sales related to the Axon Cloud, which includes Axon Evidence, cloud-based evidence management software revenue, other recurring cloud-hosted software revenue and related professional services, and is sometimes referred to as "Axon Cloud revenue." Within the Software and Sensors segment, we include only revenues and costs attributable to that segment, which costs include: costs of sales for both products and services, direct labor, product management and research and development ("R&D") for products included, or to be included, within the Software and Sensors segment. All other costs are included in the TASER segment.

6

AXON ENTERPRISE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)




Our Chief Executive Officer, who is the Chief Operating Decision Maker (the “CODM”), is not provided asset information or sales, general, and administrative expense by segment. Reportable segments are determined based on discrete financial information reviewed by the CODM. We organize and review operations based on products and services. We perform an analysis of our reportable segments on at least an annual basis. 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, 2019 and 2018, no individual country outside the U.S. represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three and nine months ended September 30, 2019 and 2018, no customer represented more than 10% of total net sales. At September 30, 2019 and December 31, 2018, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets.
We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the U.S., Canada, China, Israel, Mexico, Republic of Korea, and Taiwan. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases without incurring significant production delays. We also strategically hold safety stock levels on custom components to further reduce this risk. For off the shelf components, we believe that in most cases there are readily available alternative suppliers who can consistently meet our needs for these components. We acquire most of our components on a purchase order basis and do not have any significant long-term contracts with component suppliers.
Income per Common Share
Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Potentially dilutive securities include outstanding stock options and unvested restricted stock units ("RSUs"). The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities.
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,
 
2019
 
2018
 
2019
 
2018
Numerator for basic and diluted earnings per share:
 
 
 
 
 
 
 
Net income
$
6,104

 
$
5,711

 
$
13,261

 
$
27,122

Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding
59,278

 
58,340

 
59,128

 
55,681

Dilutive effect of stock-based awards
781

 
1,465

 
810

 
1,573

Diluted weighted average shares outstanding
60,059

 
59,805

 
59,938

 
57,254

Anti-dilutive stock-based awards excluded
12,477

 
6,793

 
12,546

 
6,760

Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.10

 
$
0.10

 
$
0.22

 
$
0.49

Diluted
$
0.10

 
$
0.10

 
$
0.22

 
$
0.47


Standard Warranties
We warranty our CEWs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will repair or replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated

7

AXON ENTERPRISE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)




based on historical data related to warranty claims on a quarterly basis and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying condensed consolidated balance sheets. 
Changes in our estimated product warranty liabilities were as follows (in thousands):
 
Nine Months Ended September 30,
 
2019
 
2018
Balance, beginning of period
$
898

 
$
644

Utilization of accrual
(718
)
 
(384
)
Warranty expense
891

 
699

Balance, end of period
$
1,071

 
$
959


Fair Value Measurements and Financial Instruments
The fair value framework 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, 2019 and December 31, 2018 were comprised of money market funds and, at September 30, 2019, also included agency bonds, corporate bonds, municipal bonds, and U.S. Treasury repurchase agreements. See additional disclosure regarding the fair value of our cash equivalents and investments in Note 3. Included in the balance of other assets as of September 30, 2019 and December 31, 2018 was $4.0 million and $3.6 million, respectively, related to corporate-owned life insurance policies which are used to fund our deferred compensation plan. We determine the fair value of insurance contracts by obtaining the cash surrender value of the contracts from the issuer, a Level 2 valuation technique.
Our financial instruments also include accounts and notes receivable, contract assets, accounts payable and accrued liabilities. As these instruments are generally short-term in nature, their carrying values approximate their fair values on the accompanying condensed consolidated balance sheets.


8

AXON ENTERPRISE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)




Restricted Cash

Restricted cash balances as of September 30, 2019 and December 31, 2018 included $0.9 million of sales proceeds related to long-term contracts with customers, which were included in prepaid expenses and other current assets on our condensed consolidated balance sheets. The proceeds are held in escrow until certain billing milestones are achieved, and then specified amounts are transferred to our operating accounts. Restricted cash balances as of September 30, 2019 and December 31, 2018 also included $0.7 million related to a performance guarantee for an international customer sales contract, which were included in other assets on our accompanying condensed consolidated balance sheets.
Valuation of Goodwill, Intangibles and Long-lived Assets
We evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such circumstances could include, but are not limited to, a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. During the nine months ended September 30, 2019, we abandoned certain capitalized software related to implementation work on an enterprise resource planning system conversion, resulting in an impairment charge of $1.3 million, which was included in sales, general and administrative expense in the accompanying condensed consolidated statements of operations. During the three months ended September 30, 2019, we abandoned certain planning and site development activities related to our planned new headquarters, resulting in an impairment charge of $0.7 million, which was included in sales, general and administrative expense in the accompanying condensed consolidated statements of operations.
We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year.
Recently Issued Accounting Guidance

Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. In July 2018, the FASB issued additional guidance which provided an additional transition method for adopting the updated guidance.  Most prominent among the changes in the standard is the requirement for lessees to recognize ROU assets and lease liabilities for those leases that were classified as operating leases under previous U.S. GAAP. On January 1, 2019, we adopted Topic 842 by applying the non-comparative modified retrospective method of adoption. Under this method, financial information related to periods prior to adoption will be as originally reported under the then-current standard (Topic 840, Leases).

Results for reporting periods beginning on or after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted, and continue to be reported in accordance with our historic accounting under Topic 840. We elected to apply the package of practical expedients to not reassess whether a contract is or contains a lease, lease classification, or initial lease costs for all leases that commenced before the adoption date.


9

AXON ENTERPRISE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)




The adoption had a material impact to our condensed consolidated balance sheet. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. There was no other impact from the adoption. The adjustments to the opening balance sheet were as follows (in thousands):
 
December 31, 2018
 
Impact of Adoption of Topic 842 on Opening Balance Sheet
 
January 1, 2019
 
(As reported)
 
 
(As adjusted)
Consolidated Balance Sheet Data:
 
 
 
 
 
Other assets
$
22,999

 
$
12,483

 
$
35,482

Total assets
719,540

 
12,483

 
732,023

 
 
 
 
 

Accrued liabilities
41,092

 
(1,138
)
 
39,954

Other current liabilities
37

 
3,588

 
3,625

Total current liabilities
166,011

 
2,450

 
168,461

Other long-term liabilities
5,704

 
10,033

 
15,737

Total liabilities
252,216

 
12,483

 
264,699

Total liabilities and stockholders' equity
719,540

 
12,483

 
732,023



See Note 11 for further disclosures related to Topic 842.
In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718), expanding the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this standard on January 1, 2019 and the adoption had no impact on our condensed consolidated financial statements.

Effective the first quarter of 2020:
 
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 includes an impairment model (known as the current expected credit loss model) on financial instruments and other commitments that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The use of forecasted information is intended to incorporate more timely information in the estimate of expected credit loss. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as credit quality. We are currently in the process of selecting the appropriate credit loss models for our investments, accounts and notes receivable, and contract assets and evaluating our processes and controls in preparation for the adoption of ASU 2016-13.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendments apply to the disclosures of changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted, and an entity is also permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date. Adoption of this ASU is not expected to have a material impact on our consolidated financial statements.
Reclassification of Prior Year Presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

10


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, 2019
 
Three Months Ended September 30, 2018
 
TASER
 
Software and Sensors
 
Total
 
TASER
 
Software and Sensors
 
Total
TASER 7
$
20,214

 
$

 
$
20,214

 
$

 
$

 
$

TASER X26P
11,578

 

 
11,578

 
17,998

 

 
17,998

TASER X2
13,241

 

 
13,241

 
20,392

 

 
20,392

TASER Pulse and Bolt
1,132

 

 
1,132

 
1,402

 

 
1,402

Single cartridges
18,901

 

 
18,901

 
18,406

 

 
18,406

Axon Body

 
6,763

 
6,763

 

 
4,744

 
4,744

Axon Flex

 
1,670

 
1,670

 

 
1,325

 
1,325

Axon Fleet

 
4,341

 
4,341

 

 
1,809

 
1,809

Axon Dock

 
3,358

 
3,358

 

 
2,178

 
2,178

Axon Evidence and cloud services
218

 
34,022

 
34,240

 

 
23,915

 
23,915

TASER Cam

 
534

 
534

 

 
717

 
717

Extended warranties
4,543

 
4,714

 
9,257

 
4,123

 
3,161

 
7,284

Other
1,916

 
3,692

 
5,608

 
1,345

 
3,321

 
4,666

Total
$
71,743

 
$
59,094

 
$
130,837

 
$
63,666

 
$
41,170

 
$
104,836


 
Nine Months Ended September 30, 2019
 
Nine Months Ended September 30, 2018
 
TASER
 
Software and Sensors
 
Total
 
TASER
 
Software and Sensors
 
Total
TASER 7
$
39,466

 
$

 
$
39,466

 
$

 
$

 
$

TASER X26P
37,832

 

 
37,832

 
52,618

 

 
52,618

TASER X2
40,413

 

 
40,413

 
62,686

 

 
62,686

TASER Pulse and Bolt
2,920

 

 
2,920

 
3,849

 

 
3,849

Single cartridges
57,354

 

 
57,354

 
51,763

 

 
51,763

Axon Body

 
18,820

 
18,820

 

 
15,082

 
15,082

Axon Flex

 
4,517

 
4,517

 

 
4,529

 
4,529

Axon Fleet

 
10,977

 
10,977

 

 
6,640

 
6,640

Axon Dock

 
9,401

 
9,401

 

 
7,332

 
7,332

Axon Evidence and cloud services
363

 
93,461

 
93,824

 

 
64,513

 
64,513

TASER Cam

 
2,481

 
2,481

 

 
2,839

 
2,839

Extended warranties
13,341

 
14,064

 
27,405

 
11,567

 
8,521

 
20,088

Other
6,017

 
7,582

 
13,599

 
5,331

 
8,007

 
13,338

Total
$
197,706

 
$
161,303

 
$
359,009

 
$
187,814

 
$
117,463

 
$
305,277

The following table presents our revenues disaggregated by geography (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2019
 
2018
 
2019
 
2018
United States
$
110,809

 
85
%
 
$
88,125

 
84
%
 
$
298,736

 
83
%
 
$
244,806

 
80
%
Other countries
20,028

 
15

 
16,711

 
16

 
60,273

 
17

 
60,471

 
20

Total
$
130,837

 
100
%
 
$
104,836

 
100
%
 
$
359,009

 
100
%
 
$
305,277

 
100
%


11


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, 2019 (in thousands):
 
September 30, 2019
Contract assets, net
$
33,635

Contract liabilities (deferred revenue)
209,309

Revenue recognized in the period from:
 
Amounts included in contract liabilities at the beginning of the period
83,159


Contract liabilities (deferred revenue) consisted of the following (in thousands):
 
September 30, 2019
 
December 31, 2018
 
Current
 
Long-Term
 
Total
 
Current
 
Long-Term
 
Total
Warranty:
 
 
 
 
 
 
 
 
 
 
 
TASER
$
11,677

 
$
16,633

 
$
28,310

 
$
12,797

 
$
16,847

 
$
29,644

Software and Sensors
9,899

 
5,450

 
15,349

 
8,273

 
6,516

 
14,789

 
21,576

 
22,083

 
43,659

 
21,070

 
23,363

 
44,433

Hardware:
 
 
 
 
 
 
 
 
 
 
 
TASER
4,378

 
17,601

 
21,979

 
9,355

 
15,598

 
24,953

Software and Sensors
39,308

 
27,357

 
66,665

 
20,878

 
24,685

 
45,563

 
43,686

 
44,958

 
88,644

 
30,233

 
40,283

 
70,516

Services:
 
 
 
 
 
 
 
 
 
 
 
TASER
11

 
396

 
407

 

 

 

Software and Sensors
61,887

 
14,712

 
76,599

 
55,713

 
10,771

 
66,484

 
61,898

 
15,108

 
77,006

 
55,713

 
10,771

 
66,484

Total
$
127,160

 
$
82,149

 
$
209,309

 
$
107,016

 
$
74,417

 
$
181,433


 
September 30, 2019
 
December 31, 2018
 
Current
 
Long-Term
 
Total
 
Current
 
Long-Term
 
Total
TASER
$
16,066

 
$
34,630

 
$
50,696

 
$
22,152

 
$
32,445

 
$
54,597

Software and Sensors
111,094

 
47,519

 
158,613

 
84,864

 
41,972

 
126,836

Total
$
127,160

 
$
82,149

 
$
209,309

 
$
107,016

 
$
74,417

 
$
181,433


Remaining Performance Obligations
As of September 30, 2019, we had approximately $1.13 billion of remaining performance obligations, which included both recognized contract liabilities as well as amounts that will be invoiced and recognized in future periods. The remaining performance obligations are limited only to arrangements that meet the definition of a contract under Topic 606 as of September 30, 2019. We expect to recognize between 15% - 20% of this balance over the next twelve months, and generally expect the remainder to be recognized over the following five to seven years, subject to risks related to delayed deployments, budget appropriation or other contract cancellation clauses.

12

AXON ENTERPRISE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)




3. Cash, Cash Equivalents and Investments
The following tables summarize our cash, cash equivalents, and held-to-maturity investments at September 30, 2019 and December 31, 2018 (in thousands):
 
As of September 30, 2019
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Short-Term Investments
 
Long-Term Investments
Cash
$
80,269

 
$

 
$

 
$
80,269

 
$
80,269

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
37,311

 

 

 
37,311

 
37,311

 

 

Agency bonds
32,834

 
4

 
(6
)
 
32,832

 
12,068

 
2,000

 
18,766

Subtotal
70,145

 
4

 
(6
)
 
70,143

 
49,379

 
2,000

 
18,766

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 2:
 
 
 
 
 
 
 
 
 
 
 
 
 
State and municipal obligations
4,454

 
1

 
(1
)
 
4,454

 

 
4,454

 

Corporate bonds
127,987

 
51

 
(31
)
 
128,007

 
2,903

 
102,459

 
22,625

U.S. Treasury repurchase agreements
70,000






70,000


70,000





Subtotal
202,441

 
52

 
(32
)
 
202,461

 
72,903

 
106,913

 
22,625

Total
$
352,855

 
$
56

 
$
(38
)
 
$
352,873

 
$
202,551

 
$
108,913

 
$
41,391


 
As of December 31, 2018
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Short-Term Investments
 
Long-Term Investments
Cash
$
144,095

 
$

 
$

 
$
144,095

 
$
144,095

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
205,367

 

 

 
205,367

 
205,367

 

 

Total
$
349,462

 
$

 
$

 
$
349,462

 
$
349,462

 
$

 
$


We believe unrealized losses on our investments are due to interest rate fluctuations. As these investments are short-term in nature, are expected to be redeemed at par value, and/or because we have the ability and intent to hold these investments to maturity, we do not consider these investments to be other than temporarily impaired as of September 30, 2019.
4. Inventory
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost of raw materials, which approximates the first-in, first-out (“FIFO”) method and includes allocations of manufacturing labor and overhead. Included in finished goods at September 30, 2019 and December 31, 2018 was $1.4 million and $1.4 million, respectively, of trial and evaluation hardware units. Provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. Inventory consisted of the following at September 30, 2019 and December 31, 2018 (in thousands):
 
September 30, 2019
 
December 31, 2018
Raw materials
$
21,096

 
$
19,670

Finished goods
19,570

 
14,093

Total inventory
$
40,666

 
$
33,763



13

AXON ENTERPRISE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)




5. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2019 were as follows (in thousands):
 
TASER
 
Software and Sensors
 
Total
Balance, beginning of period
$
1,338

 
$
23,643

 
$
24,981

Foreign currency translation adjustment
(52
)
 
(53
)
 
(105
)
Balance, end of period
$
1,286

 
$
23,590

 
$
24,876



Intangible assets (other than goodwill) consisted of the following (in thousands):
 
 
 
September 30, 2019
 
December 31, 2018
 
Useful
Life
 
Gross
Carrying
Amount