Stock Analysis on Net
Stock Analysis on Net

Axon Enterprise Inc. (NASDAQ:AXON)

This company has been moved to the archive! The financial data has not been updated since May 9, 2023.

Common-Size Income Statement

Axon Enterprise Inc., common-size consolidated income statement

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12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net sales from products 67.35 70.48 73.46 75.25 78.00
Net sales from services 32.65 29.52 26.54 24.75 22.00
Net sales 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of product sales -30.52 -30.13 -32.91 -35.92 -33.17
Cost of service sales -8.24 -7.22 -5.95 -6.20 -5.27
Cost of sales -38.77% -37.35% -38.87% -42.12% -38.44%
Gross margin 61.23% 62.65% 61.13% 57.88% 61.56%
Sales, general and administrative -33.75 -59.65 -45.12 -40.12 -37.35
Research and development -19.65 -22.47 -18.09 -18.97 -18.30
Operating expenses -53.40% -82.12% -63.21% -59.09% -55.64%
Income (loss) from operations 7.84% -19.47% -2.08% -1.20% 5.91%
Interest expense -0.04 0.00 -0.01 -0.01 -0.02
Investment interest income 0.40 0.18 0.60 1.33 0.71
Other income, net 8.32 2.93 0.56 0.28 0.08
Interest and other income, net 8.68% 3.10% 1.15% 1.59% 0.78%
Income (loss) before (provision) benefit for income taxes 16.52% -16.37% -0.92% 0.39% 6.69%
(Provision) benefit for income taxes -4.15 9.42 0.67 -0.22 0.26
Net income (loss) 12.37% -6.95% -0.25% 0.17% 6.95%

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).

Net sales composition
Net sales from products showed a consistent downward trend, decreasing from 78% in 2018 to 67.35% in 2022. Conversely, net sales from services increased steadily over the same period, rising from 22% to 32.65%. This indicates a shift in the company's revenue structure with services gaining a larger share of total net sales.
Cost structure
The cost of product sales fluctuated but generally trended downward, moving from 33.17% in 2018 to 30.52% in 2022. The cost of service sales showed an upward trend, increasing from 5.27% to 8.24%. Overall, total cost of sales decreased from 42.12% in 2019 to 38.77% in 2022 after a peak in 2019.
Gross margin
Gross margin demonstrated variability, starting at 61.56% in 2018, declining to a low of 57.88% in 2019, then recovering to approximately 61% in subsequent years, finishing at 61.23% in 2022. This stability after 2019 suggests effective cost management despite changes in sales composition.
Operating expenses
Operating expenses as a percentage of net sales showed significant fluctuations. Sales, general and administrative expenses increased sharply from 37.35% in 2018 to a peak of 59.65% in 2021 before dropping to 33.75% in 2022. Research and development expenses remained relatively stable, ranging between 18.09% and 22.47%, peaking in 2021. Total operating expenses peaked dramatically in 2021 at 82.12% before decreasing to 53.4% in 2022, indicating a one-time increase or strategic investment that was later scaled back.
Profitability
Income (loss) from operations showed variability reflective of operating expense changes. Starting positive at 5.91% in 2018, it turned negative from 2019 through 2021, reaching a low of -19.47% in 2021, then rebounded strongly to 7.84% in 2022. Net income followed a similar pattern, declining from 6.95% in 2018 to negative in 2020 and 2021, then recovering to 12.37% in 2022. Income before taxes also reflected this volatility, falling significantly in 2021 but rebounding sharply in 2022.
Interest and other income
Interest expense remained minimal and fairly constant throughout the period. Investment interest income peaked early in 2019 at 1.33% before declining. Other income, net, increased markedly from 0.08% in 2018 to 8.32% in 2022, contributing positively to total interest and other income, which rose correspondingly to 8.68% in 2022, supporting improved profitability.
Income tax effects
Income tax provision and benefits fluctuated, with notable tax benefits in 2021 amounting to 9.42% of net sales, contrasting with a tax provision of -4.15% in 2022. These fluctuations influenced net income trends, particularly the recovery seen in 2022 despite increased tax provision.
Summary
The data reveals a strategic shift favoring services over product sales with improving cost efficiency in products but higher costs in services. The company experienced a period of elevated operating expenses and negative profitability around 2020-2021, followed by a significant recovery in 2022 driven by reduced operating expenses and increased other income. Overall, the company demonstrated resilience and adaptive cost management contributing to restored profitability by 2022.

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