Axon(US:AXON)2024-05-06 22:53Financial Performance - Revenues for the three months ended March 31, 2024, were $460.7 million, an increase of $117.7 million, or 34.3%, from the prior year[143]. - Net income for the three months ended March 31, 2024, was $133.2 million, including a realized gain of $42.3 million from the acquisition of Fusus[143]. - Net income for the three months ended March 31, 2024, was $133.2 million, a significant increase from $45.1 million for the same period in 2023, resulting in net income per basic share of $1.77 compared to $0.62[173]. - Total net sales for the three months ended March 31, 2024, were $460.7 million, an increase of $28.6 million, or 6.6%, compared to $432.1 million for the same period in 2023[175]. - Adjusted EBITDA for the three months ended March 31, 2024, was $108.9 million, an increase from $91.1 million in the previous quarter and $65.1 million in the same period last year[183]. Revenue Breakdown - Net sales from products were $272.0 million (59.0% of total sales) and from services were $188.7 million (41.0% of total sales) for the three months ended March 31, 2024[146]. - International revenue increased, driven by sales growth in Europe, the Middle East, Africa, and Asia Pacific regions[147]. - Net sales for the TASER segment increased by 33.1%, primarily due to strong adoption of the TASER 10 product[150]. - Net sales for the Software and Sensors segment increased by 35.1%, driven by user growth and adoption of premium features[151]. - Net sales for the TASER segment increased by approximately $17.4 million, or 10.8%, during the three months ended March 31, 2024, driven by strong adoption of TASER 10 and higher international cartridge volume[176]. - Net sales within the Software and Sensors segment increased by $11.2 million, or 4.1%, during the three months ended March 31, 2024, primarily due to increased adoption of premium add-on features[178]. Expenses and Margins - Gross margin decreased to 56.4% from 59.5% year-over-year, primarily due to higher stock-based compensation and payroll taxes[143]. - Gross margin for the TASER segment decreased to 50.7% from 62.2% year-over-year, while the Software and Sensors segment increased to 60.1% from 57.8%[155][156]. - Operating expenses increased by $56.3 million, reflecting higher salaries, benefits, and consulting expenses[143]. - Total sales, general, and administrative expenses increased by $36.1 million, or 31.0%, to $152.7 million for the three months ended March 31, 2024, compared to $116.6 million for the same period in 2023[159]. - Research and development expenses rose by $20.2 million, or 28.4%, totaling $91.1 million for the three months ended March 31, 2024, compared to $70.9 million for the same period in 2023[163]. - Stock-based compensation expense increased by $7.7 million, primarily due to increased headcount and additional grants awarded to employees[158]. Cash Flow and Liquidity - Cash and cash equivalents decreased by $194.7 million to $403.9 million as of March 31, 2024, compared to December 31, 2023[185]. - Net cash used in operating activities for the first three months of 2024 was $15.9 million, reflecting a decrease in operating assets and liabilities of $115.4 million[193]. - Cash used in investing activities during the first three months of 2024 was $174.0 million, including $237.8 million for a business acquisition[197]. - The company has a $200.0 million revolving credit facility available for additional working capital needs[185]. - The company has access to a $200.0 million line of credit, with $192.5 million available for borrowing as of March 31, 2024, after accounting for $7.5 million in outstanding letters of credit[208]. - The company has not borrowed any funds under the line of credit since its inception, but future borrowings could be affected by changes in underlying interest rates[208]. Tax and Interest - The provision for income taxes was $32.5 million for the three months ended March 31, 2024, reflecting an effective tax rate of 19.6%[168]. - Interest income, net, for the three months ended March 31, 2024, included realized and unrealized gains on fair value adjustments of strategic investments totaling $117.9 million[167]. Currency and Market Risks - The company's operations are subject to fluctuations in foreign currency exchange rates, particularly as most international sales are transacted in foreign currencies[209]. - The strengthening of the U.S. dollar against local currencies could increase the cost of products for international customers, potentially impacting sales[209]. - Fluctuations in currency exchange rates could pose risks to the company's business operations in the future[210]. - The company has not engaged in currency hedging activities to date, but may consider entering into foreign currency forward and option contracts in the future[210]. Strategic Initiatives - The company is shifting towards a subscription model to better align with municipal budgeting processes, impacting cash flow timing[189]. - The company plans to consider repurchases of its common stock, subject to market conditions and authorization[190]. - As of March 31, 2024, a hypothetical 100 basis point increase in interest rates would result in a $1.5 million decline in the fair market value of the portfolio[205].