Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Axon Enterprise Inc., income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Federal	10,804)	(331)	5,277)	4,247)	4,900)
State	10,118)	85)	3,886)	2,414)	1,377)
Foreign	2,892)	(60)	1,943)	1,533)	228)
Current	23,814)	(306)	11,106)	8,194)	6,505)
Federal	26,238)	(65,557)	(10,175)	(6,060)	(8,382)
State	(2,002)	(15,266)	(3,111)	(1,665)	(364)
Foreign	(2,146)	478)	(3,131)	(264)	(3)
Deferred	22,090)	(80,345)	(16,417)	(7,989)	(8,749)
Tax impact of unrecorded tax benefits liability	3,475)	(706)	744)	983)	1,143)
Provision for income taxes (income tax benefit)	49,379)	(81,357)	(4,567)	1,188)	(1,101)

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
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Axon Enterprise Inc. current decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Axon Enterprise Inc. deferred decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.
Provision for income taxes (income tax benefit)	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Axon Enterprise Inc. provision for income taxes (income tax benefit) decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Axon Enterprise Inc., effective income tax rate (EITR) reconciliation

		Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
	Federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
	Effective tax rate	25.10%	57.50%	72.60%	57.40%	-3.90%

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
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Axon Enterprise Inc. effective tax rate decreased from 2020 to 2021 and from 2021 to 2022.

Axon Enterprise Inc., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating loss carryforward	4,874)	68,353)	1,834)	2,341)	2,347)
Deferred revenue	47,586)	27,031)	21,055)	15,348)	13,304)
Deferred compensation	1,575)	1,414)	1,175)	971)	858)
Lease liability	9,973)	5,886)	5,730)	2,460)	—)
Inventory reserve	1,279)	684)	511)	1,258)	1,294)
Stock based compensation	15,374)	10,913)	18,890)	10,769)	3,758)
Amortization	2,820)	2,672)	2,436)	1,133)	412)
R&D tax credit carryforward	12,826)	29,249)	6,654)	4,957)	5,193)
Reserves, accruals, and other	17,732)	14,717)	7,274)	3,394)	3,094)
R&D capitalization, net	46,122)	—)	—)	—)	—)
Convertible debt, net	48,378)	—)	—)	—)	—)
Deferred income tax assets before valuation allowance	208,539)	160,919)	65,559)	42,631)	30,260)
Valuation allowance	(26,368)	(16,168)	(7,308)	(7,172)	(7,429)
Deferred income tax assets	182,171)	144,751)	58,251)	35,459)	22,831)
Customer contract asset	(552)	(1,104)	(1,150)	(883)	—)
Right of use asset	(8,748)	(5,008)	(5,237)	(2,228)	—)
Depreciation	(10,272)	(8,938)	(5,363)	(3,715)	(2,195)
Amortization	—)	—)	—)	(62)	(57)
Strategic investments	(4,615)	(2,653)	(321)	—)	—)
Prepaid expenses	(1,119)	(594)	(874)	(600)	—)
Other	—)	(72)	(185)	(637)	(1,232)
Deferred income tax liabilities	(25,306)	(18,369)	(13,130)	(8,125)	(3,484)
Net deferred income tax assets (liabilities)	156,865)	126,382)	45,121)	27,334)	19,347)

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
Deferred income tax assets before valuation allowance	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Axon Enterprise Inc. deferred income tax assets before valuation allowance increased from 2020 to 2021 and from 2021 to 2022.
Deferred income tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Axon Enterprise Inc. deferred income tax assets increased from 2020 to 2021 and from 2021 to 2022.
Net deferred income tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Axon Enterprise Inc. net deferred income tax assets (liabilities) increased from 2020 to 2021 and from 2021 to 2022.

Axon Enterprise Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
	Deferred income tax assets	156,866)	127,193)	45,770)	27,688)	19,347)
	Deferred income tax liabilities	1)	811)	649)	354)	—)

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
Deferred income tax assets	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Axon Enterprise Inc. deferred income tax assets increased from 2020 to 2021 and from 2021 to 2022.
Deferred income tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Axon Enterprise Inc. deferred income tax liabilities increased from 2020 to 2021 but then decreased significantly 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: Noncurrent deferred tax assets, net	156,866)	127,193)	45,770)	27,688)	19,347)
Total assets (adjusted)	2,695,028)	1,561,017)	1,335,253)	817,951)	700,193)
Adjustment to Total Liabilities
Total liabilities (as reported)	1,583,403)	640,361)	404,768)	302,144)	252,216)
Less: Noncurrent deferred tax liabilities, net	1)	811)	649)	354)	—)
Total liabilities (adjusted)	1,583,402)	639,550)	404,119)	301,790)	252,216)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	1,268,491)	1,047,849)	976,255)	543,495)	467,324)
Less: Net deferred tax assets (liabilities)	156,865)	126,382)	45,121)	27,334)	19,347)
Stockholders’ equity (adjusted)	1,111,626)	921,467)	931,134)	516,161)	447,977)
Adjustment to Net Income (loss)
Net income (loss) (as reported)	147,139)	(60,018)	(1,724)	882)	29,205)
Add: Deferred income tax expense (benefit)	22,090)	(80,345)	(16,417)	(7,989)	(8,749)
Net income (loss) (adjusted)	169,229)	(140,363)	(18,141)	(7,107)	20,456)

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
Net Profit Margin
Reported net profit margin	12.37%	-6.95%	-0.25%	0.17%	6.95%
Adjusted net profit margin	14.22%	-16.26%	-2.66%	-1.34%	4.87%
Total Asset Turnover
Reported total asset turnover	0.42	0.51	0.49	0.63	0.58
Adjusted total asset turnover	0.44	0.55	0.51	0.65	0.60
Financial Leverage
Reported financial leverage	2.25	1.61	1.41	1.56	1.54
Adjusted financial leverage	2.42	1.69	1.43	1.58	1.56
Return on Equity (ROE)
Reported ROE	11.60%	-5.73%	-0.18%	0.16%	6.25%
Adjusted ROE	15.22%	-15.23%	-1.95%	-1.38%	4.57%
Return on Assets (ROA)
Reported ROA	5.16%	-3.56%	-0.12%	0.10%	4.06%
Adjusted ROA	6.28%	-8.99%	-1.36%	-0.87%	2.92%

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 net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Axon Enterprise Inc. adjusted net profit margin ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.
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 adjusted 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 adjusted 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 income (loss)	147,139)	(60,018)	(1,724)	882)	29,205)
Net sales	1,189,935)	863,381)	681,003)	530,860)	420,068)
Profitability Ratio
Net profit margin¹	12.37%	-6.95%	-0.25%	0.17%	6.95%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss)	169,229)	(140,363)	(18,141)	(7,107)	20,456)
Net sales	1,189,935)	863,381)	681,003)	530,860)	420,068)
Profitability Ratio
Adjusted net profit margin²	14.22%	-16.26%	-2.66%	-1.34%	4.87%

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 Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × 147,139 ÷ 1,189,935 = 12.37%

² Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Net sales
= 100 × 169,229 ÷ 1,189,935 = 14.22%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Axon Enterprise Inc. adjusted net profit margin ratio 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 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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales	1,189,935)	863,381)	681,003)	530,860)	420,068)
Adjusted total assets	2,695,028)	1,561,017)	1,335,253)	817,951)	700,193)
Activity Ratio
Adjusted total asset turnover²	0.44	0.55	0.51	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 ÷ 2,695,028 = 0.44

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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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	2,695,028)	1,561,017)	1,335,253)	817,951)	700,193)
Adjusted stockholders’ equity	1,111,626)	921,467)	931,134)	516,161)	447,977)
Solvency Ratio
Adjusted financial leverage²	2.42	1.69	1.43	1.58	1.56

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
= 2,695,028 ÷ 1,111,626 = 2.42

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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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss)	169,229)	(140,363)	(18,141)	(7,107)	20,456)
Adjusted stockholders’ equity	1,111,626)	921,467)	931,134)	516,161)	447,977)
Profitability Ratio
Adjusted ROE²	15.22%	-15.23%	-1.95%	-1.38%	4.57%

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

² Adjusted ROE = 100 × Adjusted net income (loss) ÷ Adjusted stockholders’ equity
= 100 × 169,229 ÷ 1,111,626 = 15.22%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted 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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss)	169,229)	(140,363)	(18,141)	(7,107)	20,456)
Adjusted total assets	2,695,028)	1,561,017)	1,335,253)	817,951)	700,193)
Profitability Ratio
Adjusted ROA²	6.28%	-8.99%	-1.36%	-0.87%	2.92%

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 × Adjusted net income (loss) ÷ Adjusted total assets
= 100 × 169,229 ÷ 2,695,028 = 6.28%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted 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 Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

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

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

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

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)