Axon Enterprise Inc. (NASDAQ:AXON)

The current income tax expense exhibits a generally increasing trend over the observed periods, beginning at $6.5 million in 2018 and rising to $11.1 million in 2020. A notable deviation occurs in 2021, where a negative value of approximately $0.3 million is recorded, indicating an income tax benefit or reversal. The figure then sharply increases to $23.8 million in 2022, representing a significant rise compared to previous years.

Deferred income tax expense shows negative values for the first four periods, indicating deferred tax benefits or reductions. Starting at about -$8.7 million in 2018, the figure slightly improves to -$8.0 million in 2019 but then declines significantly to -$16.4 million in 2020 and experiences a dramatic drop to -$80.3 million in 2021. In 2022, this trend reverses substantially, with the deferred tax figure turning positive to $22.1 million.

The provision for income taxes, which consolidates both current and deferred tax expenses, reflects the combined impact of these components. It shows variability through the periods, with a loss of $1.1 million in 2018 transitioning to a positive expense of $1.2 million in 2019. The company records a substantial income tax benefit of $4.6 million in 2020, followed by an even larger benefit of $81.3 million in 2021, aligning with the negative deferred tax expense noted in that year. In 2022, a significant expense of $49.4 million is recorded, consistent with a positive deferred tax expense and a high current tax expense.

Overall, the data reveals periods of tax expense fluctuation closely associated with changes in deferred tax balances. The pronounced deferred tax fluctuations in 2021 and 2022 suggest significant tax-related adjustments, potentially from changes in tax law, valuation allowances, or timing differences. The substantial income tax benefits recognized in 2020 and 2021 are not sustained in 2022, which reverts to a sizable income tax expense. These dynamics indicate the company experienced marked volatility in its tax provision during the period under review.

Federal Statutory Income Tax Rate

The federal statutory income tax rate remained constant at 21% over the entire period from 2018 through 2022, indicating no changes in the statutory tax environment affecting the company during these years.

Effective Tax Rate

The effective tax rate exhibited significant volatility throughout the analyzed period. In 2018, the rate was negative at -3.9%, suggesting the company may have experienced tax benefits or adjustments leading to a tax credit or refund.

In 2019, the effective tax rate surged sharply to 57.4%, more than doubling the statutory rate, which indicates the presence of substantial non-deductible expenses, valuation allowances, or changes in tax provisions affecting taxable income.

The upward trend continued into 2020, with the effective tax rate increasing further to 72.6%, representing a notably high tax expense relative to income. This suggests either unusual tax charges or adjustments impacting that year's financial results.

In 2021, the effective tax rate decreased but remained elevated at 57.5%, maintaining the pattern of rates well above the statutory baseline.

By 2022, the effective tax rate reduced considerably to 25.1%, moving closer to the statutory 21% rate, which may indicate a normalization of tax expense or realization of deferred tax assets/liabilities.

The financial data reveals several key trends and shifts over the five-year period under review.

Net operating loss carryforward

This item remained relatively stable from 2018 to 2020, with values around 2,300 thousand USD, before exhibiting a significant spike to 68,353 thousand USD in 2021, and then sharply declining to 4,874 thousand USD in 2022. This volatility suggests a substantial loss recognition or reassessment in 2021, followed by a reduction the following year.

Deferred revenue

Deferred revenue showed a steady upward trajectory, increasing from 13,304 thousand USD in 2018 to 47,586 thousand USD in 2022. This consistent growth indicates increasing advance payments or contractual obligations from customers over time.

Deferred compensation

This liability gradually increased during the period, growing from 858 thousand USD in 2018 to 1,575 thousand USD in 2022, reflecting incremental compensation commitments.

Lease liability

Nonexistent or unreported in 2018, lease liabilities appeared in 2019 at 2,460 thousand USD and escalated steadily to 9,973 thousand USD by 2022, aligning with adoption or expansion of lease obligations.

Inventory reserve

The inventory reserve initially declined from 1,294 thousand USD in 2018 to 511 thousand USD in 2020, then rebounded to 1,279 thousand USD by 2022. This fluctuation suggests adjustments in inventory valuation or write-downs.

Stock based compensation

This expense showed high variability. It surged notably from 3,758 thousand USD in 2018 to a peak of 18,890 thousand USD in 2020, fell to 10,913 thousand USD in 2021, then increased again to 15,374 thousand USD in 2022. These changes may indicate fluctuating equity incentives or stock issuance patterns.

Amortization

Amortization expense rose consistently from 412 thousand USD in 2018 to 2,820 thousand USD in 2022, indicating increasing amortizable assets or intangible asset acquisitions over time.

R&D tax credit carryforward

This asset showed significant variability, dipping slightly from 5,193 thousand USD in 2018 to 4,957 thousand USD in 2019, rising to 6,654 thousand USD in 2020, then dramatically increasing to 29,249 thousand USD in 2021 before falling to 12,826 thousand USD in 2022. The pattern suggests changing amounts of unused research and development tax credits with a notable build-up in 2021.

Reserves, accruals, and other

There was a marked increase in these liabilities from 3,094 thousand USD in 2018 to 17,732 thousand USD in 2022, evidencing growing accruals or contingency reserves.

R&D capitalization, net

This item appeared solely in 2022 with a significant balance of 46,122 thousand USD, indicating the capitalization of research and development expenditures in that year.

Convertible debt, net

Reported only in 2022, the convertible debt balance registered at 48,378 thousand USD, reflecting new convertible debt issuance or classification.

Deferred income tax assets (before and after valuation allowance)

Deferred tax assets before valuation allowance increased steadily from 30,260 thousand USD in 2018 to 208,539 thousand USD in 2022. Correspondingly, valuation allowances also expanded in the negative from -7,429 thousand USD to -26,368 thousand USD in 2022. Overall deferred income tax assets net of valuation allowance grew substantially, from 22,831 thousand USD in 2018 to 182,171 thousand USD in 2022, indicating an enhanced realizable tax benefit recognition.

Customer contract asset and Right of use asset

Both assets were newly reported starting in 2019 with negative values indicating asset amortization or decreases. The customer contract asset moved from -883 thousand USD in 2019 to -552 thousand USD in 2022, while the right of use asset declined from -2,228 thousand USD in 2019 to -8,748 thousand USD in 2022, reflecting leases and contract right of use amortization impacts.

Depreciation

Depreciation expense increased steadily, from -2,195 thousand USD in 2018 to -10,272 thousand USD in 2022, consistent with an expanding asset base.

Strategic investments

Reported only from 2020 onward, these investments showed increasing negative balances, from -321 thousand USD to -4,615 thousand USD by 2022, possibly indicating write-downs or impairments.

Prepaid expenses

This asset fluctuated modestly without clear trend, ranging between -600 thousand USD and -1,119 thousand USD throughout the period.

Other

The "Other" line item minimized substantially from -1,232 thousand USD in 2018 to -72 thousand USD in 2021, with no further data in 2022, indicating reduced miscellaneous adjustments or losses.

Deferred income tax liabilities

These liabilities grew notably, from -3,484 thousand USD in 2018 to -25,306 thousand USD in 2022, signifying increased taxable temporary differences or deferred tax obligations.

Net deferred income tax assets (liabilities)

This net position rose markedly from 19,347 thousand USD in 2018 to 156,865 thousand USD in 2022, underscoring an overall increase in deferred tax assets relative to liabilities and improved potential tax benefits.

In summary, the data exhibits substantial growth in deferred revenue and deferred tax assets, indicating operational expansion and enhanced tax attribute recognition. Significant fluctuations in stock-based compensation and the introduction of new financial categories such as lease liabilities, R&D capitalization, and convertible debt in recent years suggest evolving balance sheet complexity. Increasing reserves, accruals, and amortization expenses reflect broader operational scale and capital asset intensity. Overall, there is a trend towards increasing deferred financial obligations and asset capitalization, consistent with business growth and investment.

Deferred income tax assets

There is a consistent and substantial increase in deferred income tax assets over the five-year period. Starting at $19,347 thousand in 2018, the asset value rose to $27,688 thousand in 2019, which reflects moderate growth. The increase accelerated in subsequent years, reaching $45,770 thousand in 2020. A significant jump occurred in 2021, where the value almost tripled to $127,193 thousand. The upward trend continued into 2022, achieving $156,866 thousand. This rising trend suggests enhanced recognition of deferred tax benefits, possibly driven by increased timing differences or tax planning strategies improving the company's future tax benefits.

Deferred income tax liabilities

The data on deferred income tax liabilities presents an unusual pattern. Starting from no reported value in 2018, the liabilities appeared at $354 thousand in 2019 and increased to $649 thousand in 2020. In 2021, the amount rose modestly to $811 thousand. However, a significant reduction occurred in 2022, with the liability dropping to just $1 thousand. This sharp decline may indicate either realization of deferred tax liabilities, changes in tax positions, or adjustments in accounting estimates related to deferred tax obligations. The negligible amount recorded in 2022 contrasts sharply with previous years and implies minimal deferred tax liabilities at that point.

The financial data over the five-year period reveals several noteworthy trends in assets, liabilities, equity, and net income for the company.

Total Assets

Both reported and adjusted total assets exhibit consistent growth year over year. Reported total assets increased substantially from approximately $720 million in 2018 to nearly $2.85 billion in 2022. Adjusted total assets follow a similar trajectory, rising from about $700 million to roughly $2.7 billion over the same period. This reflects significant expansion in the company's asset base, with the gap between reported and adjusted figures generally widening moderately over time.

Total Liabilities

Reported liabilities display a marked increase, growing from approximately $252 million in 2018 to over $1.58 billion in 2022. Adjusted liabilities closely track the reported figures with minor deviations, indicating consistent adjustments related to deferred or income tax considerations. The rise in liabilities, particularly in later years, is substantial, suggesting increased obligations which may be associated with the asset growth or potentially higher leverage.

Stockholders’ Equity

Reported stockholders’ equity grows steadily from $467 million in 2018 to approximately $1.27 billion in 2022. The adjusted equity figures are consistently lower than reported equity each year but follow a similar upward trend, increasing from around $448 million to $1.11 billion. This suggests that adjustments reduce equity values, possibly due to deferred tax liabilities or other adjustments, yet the overall capital base strengthens over the five-year span.

Net Income (Loss)

Reported net income shows significant volatility. The company records positive net income in 2018 and 2019 ($29.2 million and $0.9 million respectively), a small loss in 2020, and a large loss in 2021 of approximately $60 million, followed by a strong rebound to a profit of about $147 million in 2022. Adjusted net income presents a more persistent loss pattern from 2019 through 2021, with losses deepening significantly each year and peaking at roughly $140 million in 2021. However, similar to reported figures, adjusted net income turns positive in 2022, reaching around $169 million. This pattern indicates underlying operational challenges that were exacerbated in the 2019-2021 period and subsequently resolved or improved in 2022. The adjustments deepen losses during the down years, implying significant tax or accounting impacts were present during those periods.

Overall, the data displays a company experiencing rapid growth in assets and liabilities, with equity also increasing but at a comparatively slower pace after adjustments. Earnings volatility and significant losses in the mid-period are neutralized by a strong recovery in the latest year, highlighting potential operational turnaround or non-recurring impacts that improved profitability. The distinction between reported and adjusted figures emphasizes the impact of income tax-related accounting adjustments on the company’s financial position and performance metrics over time.

The analysis of the financial ratios over the five-year period reflects significant fluctuations and noteworthy trends in profitability, efficiency, leverage, and returns.

Net Profit Margin

The reported net profit margin started at a healthy 6.95% in 2018 but declined sharply to near zero and negative values in the succeeding years, hitting a low of -6.95% in 2021 before rebounding strongly to 12.37% in 2022. The adjusted net profit margin followed a similar trajectory, though generally registering lower values than the reported figures. The adjusted margin declined from 4.87% in 2018 to a significant negative of -16.26% in 2021, before recovering impressively to 14.22% in 2022. This pattern indicates volatile profitability with a pronounced downturn during 2019-2021, followed by a robust recovery in the most recent year.

Total Asset Turnover

The total asset turnover ratios reveal a moderate decline in asset utilization over the period. Reported asset turnover decreased from 0.58 in 2018 to 0.42 in 2022, indicating a reduction in efficiency in generating sales from assets. The adjusted asset turnover exhibited a similar trend but consistently stayed slightly above the reported figures, starting at 0.60 in 2018 and falling to 0.44 by 2022. The minor recovery in 2021 to 0.55 adjusted ratio was not sustained, suggesting ongoing challenges in asset utilization efficiency.

Financial Leverage

Financial leverage showed a clear increasing trend throughout the period. Reported leverage ratios rose from 1.54 in 2018 to 2.25 in 2022, while adjusted leverage ratios tracked similarly but remained marginally higher, peaking at 2.42 in 2022. This increase suggests an escalating reliance on debt or other liabilities to finance the company’s assets, which may imply higher financial risk, especially amid the periods of negative profitability.

Return on Equity (ROE)

The reported ROE closely mirrors the net profit margin trend, starting at 6.25% in 2018, falling sharply to negative figures between 2019 and 2021, with the lowest point at -5.73% in 2021, before recovering to 11.60% in 2022. The adjusted ROE points to a more severe impact on equity returns, dipping into significant negative territory from -1.38% in 2019 down to -15.23% in 2021, then rebounding strongly to 15.22% in 2022. This volatility highlights the sensitivity of shareholders' returns to profitability fluctuations and adjustments for deferred income tax impacts.

Return on Assets (ROA)

Both reported and adjusted ROA show a similar downward trend during the middle years, reflecting diminished asset profitability. Reported ROA fell from 4.06% in 2018 to -3.56% in 2021 before recovering to 5.16% in 2022. Adjusted ROA exhibited a sharper negative peak at -8.99% in 2021, then improved to 6.28% in 2022. The data suggests that asset returns were adversely impacted during the 2019-2021 period but saw a notable recovery subsequently.

Overall, the financial performance over the analyzed years indicates a period of significant challenge between 2019 and 2021, characterized by declining profitability, asset utilization, and negative returns to equity and assets, accompanied by increasing financial leverage. The turnaround in 2022 across all metrics suggests effective remedial actions or favorable circumstances that improved profitability and efficiencies substantially, despite the higher leverage level maintained at the end of the period.

Reported Net Income (Loss)

The reported net income exhibits significant volatility over the analyzed periods. Initially, there was a positive net income of 29,205 thousand US dollars in 2018, which sharply declined to a minimal profit of 882 thousand US dollars in 2019. The trend turned negative in the subsequent years, with a reported loss of 1,724 thousand US dollars in 2020 and a substantial loss of 60,018 thousand US dollars in 2021. However, a notable recovery occurred in 2022, with reported net income surging to 147,139 thousand US dollars, marking the highest figure in the period.

Adjusted Net Income (Loss)

The adjusted net income follows a more consistently negative trajectory until 2022. Starting at 20,456 thousand US dollars in 2018, it decreased into negative territory with losses worsening from 7,107 thousand in 2019 to 18,141 thousand in 2020, and further deepening to 140,363 thousand in 2021. A recovery is evident in 2022, with adjusted net income turning positive at 169,229 thousand US dollars, surpassing the levels of 2018 and prior years.

Reported Net Profit Margin

The reported net profit margin illustrates a decline from a healthy 6.95% in 2018 to near breakeven at 0.17% in 2019. This margin declines into negative figures in 2020 (-0.25%) and deteriorates substantially in 2021 to -6.95%. In 2022, it rebounds significantly to 12.37%, reaching the highest margin in the examined timeframe.

Adjusted Net Profit Margin

The adjusted net profit margin maintains a similar pattern to the reported figures but with more pronounced negative values. It starts at 4.87% in 2018, dips to -1.34% in 2019, and further decreases to -2.66% in 2020. The margin declines more sharply in 2021 to -16.26%, reflecting greater losses when adjustments are considered. In 2022, the adjusted margin recovers markedly to 14.22%, the highest in the observed period.

Overall Analysis

The data points to a period of financial challenge between 2019 and 2021, with reported and adjusted net income showing declining profitability and increasing losses. The steep drop in both reported and adjusted profitability in 2021 is noteworthy, reflecting significant operating or non-operational difficulties. The sharp positive reversal in 2022, both in income and margin terms, suggests successful recovery efforts or business improvements. Notably, the adjusted figures highlight more severe losses in the middle years than reported figures, emphasizing the impact of tax or other non-operating adjustments on underlying profitability. The substantial rebound in 2022 demonstrates a return to strong financial performance exceeding prior positive results.

The financial data reveals significant growth in both reported and adjusted total assets over the five-year period under review, indicative of expansion or substantial capital investments. Reported total assets increased from approximately $719.5 million in 2018 to about $2.85 billion in 2022. Similarly, adjusted total assets showed a parallel upward trajectory, rising from approximately $700.2 million to $2.70 billion in the same timeframe.

Despite the escalating asset base, both reported and adjusted total asset turnover ratios exhibit a declining trend across these years. The reported total asset turnover ratio decreased from 0.58 in 2018 to 0.42 in 2022, while the adjusted total asset turnover ratio moved from 0.60 to 0.44 over the same period. This downward movement suggests that asset utilization efficiency appears to be weakening as the company grows its asset base.

The initial years show relatively higher turnover ratios, implying more effective use of assets to generate revenue. However, the decline in turnover ratios in subsequent years may indicate that asset growth has outpaced revenue generation or that the company has invested heavily in assets that have not yet fully translated into proportional revenue streams.

Overall, the trends suggest a company in a growth phase, characterized by significant asset accumulation. Nevertheless, there is a notable decrease in asset turnover ratios, highlighting a potential need to improve asset management or to evaluate the timing of returns on recent asset investments.

Total Assets Growth

Both reported and adjusted total assets increased markedly from 2018 to 2022, with reported assets nearly quadrupling, indicating substantial expansion.

Asset Turnover Ratio Decline

Reported and adjusted asset turnover ratios consistently declined, dropping by about 28% to 30%, suggesting a reduced efficiency in using assets to generate revenue.

Implication of Trends

The juxtaposition of asset growth and turnover decline signals that while the company is expanding its asset base, the incremental revenue generated per unit of asset is decreasing, which may warrant operational or strategic adjustments.

The financial data exhibits significant growth in both reported and adjusted total assets over the five-year period. Reported total assets increased from approximately 719.5 million USD at the end of 2018 to about 2.85 billion USD by the end of 2022, indicating robust asset expansion. Adjusted total assets followed a similar trajectory, rising from around 700.2 million USD to approximately 2.70 billion USD over the same timeframe. This suggests consistent growth both before and after adjustments for income tax effects.

Reported and adjusted stockholders’ equity also show notable increases, although at a slower pace relative to total assets. Reported equity grew from roughly 467.3 million USD in 2018 to nearly 1.27 billion USD in 2022, reflecting increased retained earnings or additional equity injections. Adjusted equity, which likely accounts for deferred tax impacts, increased from about 448.0 million USD to approximately 1.11 billion USD, showing a similar ascending trend but somewhat lower values than the reported figures, indicating the adjustments reduce equity amounts moderately.

The financial leverage ratios demonstrate a shift in the company’s capital structure over the period. Reported financial leverage fluctuated within a moderate range from 1.54 in 2018 to 1.61 in 2021 but surged significantly to 2.25 in 2022. Adjusted financial leverage follows a comparable pattern with a slight increase from 1.56 to 1.69 in 2021 before jumping to 2.42 in 2022. This marked increase in leverage indicates a substantial rise in the company’s use of debt relative to equity or adjusted equity in the most recent year.

Total Assets

Strong upward trend over the five years, more than tripling in value in both reported and adjusted terms, highlighting aggressive asset growth.

Stockholders’ Equity

Steady growth in both reported and adjusted equity, with adjusted values consistently lower than reported, reflecting deferred tax adjustments impacting equity negatively.

Financial Leverage

Relatively stable leverage ratios until 2021, followed by a pronounced increase in 2022, indicating increased financial risk or debt utilization in the latest period.

Overall, the data depicts a company experiencing rapid asset growth and increasing equity, with a recent inclination towards higher leverage, which could denote a strategic shift toward greater debt financing or increased operational scale requiring additional capital. The adjusted figures confirm the effects of income tax considerations on equity and leverage metrics, underscoring the importance of evaluating both reported and adjusted data for a comprehensive financial analysis.

The financial data reveals a series of significant fluctuations in profitability and equity metrics over the analyzed five-year period. Both reported and adjusted net income exhibit considerable volatility, with marked declines in certain years and notable recoveries in others.

Net Income Trends

Reported net income showed initial strength in 2018 with a positive amount of approximately $29.2 million. However, this was followed by a sharp decrease, hitting a low point with a loss of about $60 million in 2021. The data for 2022 reflects a significant turnaround, with reported net income increasing substantially to approximately $147.1 million. Adjusted net income mirrors this volatility but exhibits larger losses, especially between 2019 and 2021, where the adjusted net income remains negative and worsens to nearly $140.4 million loss in 2021. In 2022, adjusted net income recovers robustly to $169.2 million, surpassing reported figures.

Stockholders' Equity Movements

Stockholders’ equity, both reported and adjusted, increased steadily over the period. Reported equity rose from about $467.3 million in 2018 to $1.27 billion in 2022, demonstrating consistent growth with noticeable acceleration after 2019. Adjusted equity also increased but at a slightly slower pace, growing from approximately $448.0 million in 2018 to $1.11 billion in 2022. The gap between reported and adjusted equity widens somewhat over time but remains aligned in its upward trend, indicating improvements in retained earnings or asset valuations despite the fluctuations in net income.

Return on Equity (ROE) Patterns

The reported ROE echoes the net income trend, starting at a moderate 6.25% in 2018, tumbling to near zero and negative values between 2019 and 2021, and rebounding strongly to 11.6% in 2022. The adjusted ROE presents a more pronounced volatility and more negative values during the downturn period, with a deep negative impact peaking at -15.23% in 2021. The recovery in 2022 is even more marked, reaching an adjusted ROE of 15.22%, which surpasses the reported measure. This suggests that when accounting for deferred income tax adjustments, the company's profitability relative to equity was more severely impacted during challenging years but also recovered more robustly.

Overall, despite significant setbacks reflected in net income and ROE from 2019 through 2021, the company demonstrates a strong recovery in 2022 as indicated by both reported and adjusted figures. Equity growth remains positive and steady, suggesting resilience and capacity to absorb income volatility. The adjustments related to deferred taxes amplify the observed fluctuations, highlighting their influence on measured profitability and returns during the period.

The financial data demonstrates significant variability in both reported and adjusted measures of income and asset utilization over the five-year period analyzed.

Net Income (Loss)

The reported net income shows notable fluctuations, beginning with a positive US$29.2 million in 2018, sharply declining to a mere US$0.9 million in 2019, and turning negative in both 2020 and 2021 with losses of approximately US$1.7 million and US$60 million respectively. A strong recovery is evident in 2022 with a substantial reported net income of about US$147.1 million. The adjusted net income follows a similar pattern but with greater volatility and larger negative figures from 2019 to 2021, culminating in a negative adjusted net income of about US$140.4 million in 2021. The recovery in adjusted net income in 2022 is even more pronounced, reaching approximately US$169.2 million.

Total Assets

Reported total assets exhibit consistent and significant growth over the period analyzed, increasing from approximately US$719.5 million in 2018 to around US$2.85 billion in 2022. The adjusted total assets mirror this growth trajectory but with slightly lower values each year, reflecting the adjustments made. This consistent increase indicates ongoing expansion of the asset base.

Return on Assets (ROA)

Reported ROA reflects the trends observed in net income, beginning at a solid 4.06% in 2018, dropping substantially to nearly zero in 2019, and turning negative in 2020 and 2021, reaching -3.56%. The ratio improves markedly in 2022 to 5.16%. Adjusted ROA, which accounts for deferred income tax adjustments, shows a more severe decline into negative territory between 2019 and 2021, reaching its low of -8.99% in 2021. Recovery is also evident in 2022 with an adjusted ROA of 6.28%, surpassing the reported ROA for that year.

Overall, the data reveals a period of financial distress and loss from 2019 through 2021, both in reported and adjusted terms, followed by a robust recovery in 2022. The increase in total assets throughout indicates possible investment and growth strategies despite the temporary profitability challenges. Adjusted figures suggest more pronounced negative impacts during the troubled years and a stronger rebound, highlighting the significance of tax-related adjustments in the company’s financial performance evaluation.