Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Axon Enterprise Inc., balance sheet: goodwill and intangible assets

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Goodwill	44,983)	43,592)	25,205)	25,013)	24,981)
Domain names	3,043)	3,043)	3,036)	3,161)	3,161)
Issued patents	2,981)	3,061)	3,232)	3,271)	2,940)
Issued trademarks	1,119)	1,130)	1,002)	1,166)	1,053)
Customer relationships	4,892)	4,985)	3,780)	3,721)	3,701)
Non-compete agreements	447)	454)	460)	450)	540)
Developed technology	18,586)	18,060)	10,660)	10,660)	13,404)
Re-acquired distribution rights	—)	—)	2,202)	2,009)	1,928)
Amortizable (definite-lived) intangible assets, gross carrying amount	31,068)	30,733)	24,372)	24,438)	26,727)
Accumulated amortization	(20,729)	(16,966)	(16,432)	(13,409)	(12,650)
Amortizable (definite-lived) intangible assets, net carrying amount	10,339)	13,767)	7,940)	11,029)	14,077)
TASER trademark	900)	900)	900)	900)	900)
My90 trademark	168)	168)	—)	—)	—)
Patents and trademarks pending	751)	635)	608)	842)	958)
Non-amortizable (indefinite-lived) intangible assets	1,819)	1,703)	1,508)	1,742)	1,858)
Intangible assets	12,158)	15,470)	9,448)	12,771)	15,935)
Goodwill and intangible assets	57,141)	59,062)	34,653)	37,784)	40,916)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Axon Enterprise Inc. goodwill increased from 2020 to 2021 and from 2021 to 2022.
Intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Axon Enterprise Inc. intangible assets increased from 2020 to 2021 but then slightly decreased from 2021 to 2022 not reaching 2020 level.
Goodwill and intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Axon Enterprise Inc. goodwill and intangible assets increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

Axon Enterprise Inc., adjustments to financial statements

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Adjustment to Total Assets
Total assets (as reported)	2,851,894)	1,688,210)	1,381,023)	845,639)	719,540)
Less: Goodwill	44,983)	43,592)	25,205)	25,013)	24,981)
Total assets (adjusted)	2,806,911)	1,644,618)	1,355,818)	820,626)	694,559)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	1,268,491)	1,047,849)	976,255)	543,495)	467,324)
Less: Goodwill	44,983)	43,592)	25,205)	25,013)	24,981)
Stockholders’ equity (adjusted)	1,223,508)	1,004,257)	951,050)	518,482)	442,343)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Axon Enterprise Inc., Financial Data: Reported vs. Adjusted

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Axon Enterprise Inc., adjusted financial ratios

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Total Asset Turnover
Reported total asset turnover	0.42	0.51	0.49	0.63	0.58
Adjusted total asset turnover	0.42	0.52	0.50	0.65	0.60
Financial Leverage
Reported financial leverage	2.25	1.61	1.41	1.56	1.54
Adjusted financial leverage	2.29	1.64	1.43	1.58	1.57
Return on Equity (ROE)
Reported ROE	11.60%	-5.73%	-0.18%	0.16%	6.25%
Adjusted ROE	12.03%	-5.98%	-0.18%	0.17%	6.60%
Return on Assets (ROA)
Reported ROA	5.16%	-3.56%	-0.12%	0.10%	4.06%
Adjusted ROA	5.24%	-3.65%	-0.13%	0.11%	4.20%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Axon Enterprise Inc. adjusted total asset turnover ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Axon Enterprise Inc. adjusted financial leverage ratio increased from 2020 to 2021 and from 2021 to 2022.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Axon Enterprise Inc. adjusted ROE deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Axon Enterprise Inc. adjusted ROA deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Axon Enterprise Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net sales	1,189,935)	863,381)	681,003)	530,860)	420,068)
Total assets	2,851,894)	1,688,210)	1,381,023)	845,639)	719,540)
Activity Ratio
Total asset turnover¹	0.42	0.51	0.49	0.63	0.58
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net sales	1,189,935)	863,381)	681,003)	530,860)	420,068)
Adjusted total assets	2,806,911)	1,644,618)	1,355,818)	820,626)	694,559)
Activity Ratio
Adjusted total asset turnover²	0.42	0.52	0.50	0.65	0.60

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 1,189,935 ÷ 2,851,894 = 0.42

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 1,189,935 ÷ 2,806,911 = 0.42

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Axon Enterprise Inc. adjusted total asset turnover ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets	2,851,894)	1,688,210)	1,381,023)	845,639)	719,540)
Stockholders’ equity	1,268,491)	1,047,849)	976,255)	543,495)	467,324)
Solvency Ratio
Financial leverage¹	2.25	1.61	1.41	1.56	1.54
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets	2,806,911)	1,644,618)	1,355,818)	820,626)	694,559)
Adjusted stockholders’ equity	1,223,508)	1,004,257)	951,050)	518,482)	442,343)
Solvency Ratio
Adjusted financial leverage²	2.29	1.64	1.43	1.58	1.57

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 2,851,894 ÷ 1,268,491 = 2.25

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 2,806,911 ÷ 1,223,508 = 2.29

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Axon Enterprise Inc. adjusted financial leverage ratio increased from 2020 to 2021 and from 2021 to 2022.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss)	147,139)	(60,018)	(1,724)	882)	29,205)
Stockholders’ equity	1,268,491)	1,047,849)	976,255)	543,495)	467,324)
Profitability Ratio
ROE¹	11.60%	-5.73%	-0.18%	0.16%	6.25%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income (loss)	147,139)	(60,018)	(1,724)	882)	29,205)
Adjusted stockholders’ equity	1,223,508)	1,004,257)	951,050)	518,482)	442,343)
Profitability Ratio
Adjusted ROE²	12.03%	-5.98%	-0.18%	0.17%	6.60%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 147,139 ÷ 1,268,491 = 11.60%

² Adjusted ROE = 100 × Net income (loss) ÷ Adjusted stockholders’ equity
= 100 × 147,139 ÷ 1,223,508 = 12.03%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Axon Enterprise Inc. adjusted ROE deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss)	147,139)	(60,018)	(1,724)	882)	29,205)
Total assets	2,851,894)	1,688,210)	1,381,023)	845,639)	719,540)
Profitability Ratio
ROA¹	5.16%	-3.56%	-0.12%	0.10%	4.06%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income (loss)	147,139)	(60,018)	(1,724)	882)	29,205)
Adjusted total assets	2,806,911)	1,644,618)	1,355,818)	820,626)	694,559)
Profitability Ratio
Adjusted ROA²	5.24%	-3.65%	-0.13%	0.11%	4.20%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 147,139 ÷ 2,851,894 = 5.16%

² Adjusted ROA = 100 × Net income (loss) ÷ Adjusted total assets
= 100 × 147,139 ÷ 2,806,911 = 5.24%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Axon Enterprise Inc. adjusted ROA deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Axon Enterprise Inc. (NASDAQ:AXON)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Axon Enterprise Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Axon Enterprise Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)