Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Axon Enterprise Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income (loss)	147,139)	(60,018)	(1,724)	882)	29,205)
Depreciation and amortization	24,381)	18,694)	12,475)	11,361)	10,615)
Amortization of issuance cost	198)	—)	—)	—)	—)
Coupon interest expense	211)	—)	—)	—)	—)
Purchase accounting adjustments to goodwill	58)	—)	—)	—)	—)
Loss on disposal and abandonment of intangible assets	110)	146)	320)	67)	2,117)
Loss on disposal and impairment of property, equipment, and other assets, net	5,452)	92)	1,722)	2,542)	303)
Realized and unrealized gains on strategic investments and marketable securities, net	(98,943)	(23,035)	—)	—)	—)
Stock-based compensation	106,176)	303,331)	133,572)	78,495)	21,879)
Deferred income taxes	22,090)	(81,303)	(16,528)	(7,987)	(3,592)
Unrecognized tax benefits	3,475)	(706)	671)	983)	1,144)
Bond amortization	(1,463)	5,217)	3,345)	361)	34)
Noncash lease expense	6,725)	5,573)	4,104)	3,567)	—)
Provision for expected credit losses	699)	(214)	1,302)	—)	—)
Accounts and notes receivable and contract assets	(73,228)	(205,769)	(107,762)	(38,830)	(67,643)
Inventory	(95,987)	(18,272)	(52,156)	(4,903)	14,804)
Prepaid expenses and other assets	(52,207)	(40,158)	(14,885)	(9,845)	(12,739)
Accounts payable, accrued and other liabilities	80,757)	45,301)	8,886)	4,967)	13,506)
Deferred revenue	159,718)	175,615)	65,139)	24,013)	54,242)
Change in assets and liabilities	19,053)	(43,283)	(100,778)	(24,598)	2,170)
Adjustments to reconcile net income (loss) to net cash provided by operating activities	88,222)	184,512)	40,205)	64,791)	34,670)
Net cash provided by operating activities	235,361)	124,494)	38,481)	65,673)	63,875)
Purchases of investments	(764,374)	(362,479)	(656,522)	(354,477)	(4,331)
Proceeds from call/maturity of investments	72,138)	718,617)	379,839)	130,083)	11,158)
Exercise of warrants of strategic investments	(6,555)	—)	—)	—)	—)
Proceeds from sale of strategic investments	—)	14,546)	—)	—)	—)
Purchases of property and equipment	(55,802)	(49,886)	(72,629)	(15,939)	(11,139)
Proceeds from disposal of property and equipment	287)	43)	95)	—)	—)
Purchases of intangible assets	(307)	(392)	(241)	(404)	(558)
Strategic investments	(74,250)	(45,500)	(7,068)	—)	—)
Business acquisition, net of cash acquired	(2,104)	(22,393)	—)	—)	(4,990)
Net cash (used in) provided by investing activities	(830,967)	252,556)	(356,526)	(240,737)	(9,860)
Net proceeds from equity offering	(74)	105,514)	306,779)	—)	233,993)
Proceeds from options exercised	—)	51,614)	295)	114)	1,757)
Income and payroll tax payments for net-settled stock awards	(4,870)	(331,309)	(7,809)	(4,051)	(14,127)
Net proceeds from issuance of convertible senior notes	673,769)	—)	—)	—)	—)
Proceeds from issuance of warrants	124,269)	—)	—)	—)	—)
Purchase of convertible note hedge	(194,994)	—)	—)	—)	—)
Payment of contingent consideration for business acquisitions	—)	—)	—)	—)	(2,275)
Net cash provided by (used in) financing activities	598,100)	(174,181)	299,265)	(3,937)	219,348)
Effect of exchange rate changes on cash and cash equivalents	(3,380)	(1,982)	1,976)	329)	(774)
Net increase (decrease) in cash and cash equivalents	(886)	200,887)	(16,804)	(178,672)	272,589)
Cash and cash equivalents and restricted cash, beginning of period	356,438)	155,551)	172,355)	351,027)	78,438)
Cash and cash equivalents and restricted cash, end of period	355,552)	356,438)	155,551)	172,355)	351,027)

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 Income (Loss): The net income shows significant volatility across the periods, starting with a positive figure in 2018, dropping to minimal profit in 2019, turning into losses in 2020 and 2021, and then surging to a substantial profit in 2022. This pattern suggests fluctuations in profitability, with a strong recovery in the latest year.
Depreciation and Amortization: There is a consistent upward trend in depreciation and amortization expenses, increasing steadily each year, indicating growing investment in fixed and intangible assets or longer asset lives being recognized.
Loss on Disposal and Impairments: Losses related to disposal and impairment of assets fluctuate, with a notable spike in net loss in 2022 for property and equipment. The losses on intangible assets show a decline over time, reflecting potentially lower write-offs or disposals.
Stock-Based Compensation: Stock-based compensation expenses escalate sharply from 2018 to 2021, peaking significantly in 2021 before decreasing in 2022. This indicates a heavy use of equity incentives, which might have an impact on earnings quality.
Deferred Income Taxes and Tax Benefits: Deferred income taxes displayed increasing negative values from 2018 to 2021, followed by a positive reversal in 2022. Unrecognized tax benefits vary but remain within a moderate range without a clear trend.
Bond Amortization and Noncash Lease Expense: Bond amortization increases until 2021 before turning negative in 2022, possibly due to debt restructuring or adjustments. Noncash lease expense shows a steady increase, reflecting growth in lease obligations or adoption of new lease accounting standards.
Changes in Working Capital: Accounts and notes receivable and contract assets exhibit significant negative changes, especially large in 2021, indicating increased receivables or timing of cash collections. Inventory declines markedly in 2020 and remains negative thereafter, possibly reflecting inventory write-downs or sales trends. Prepaid expenses and other assets also increased negatively, suggesting larger prepaid balances or adjustments. Conversely, accounts payable and accrued liabilities increase significantly from 2020 onward, implying extended payment terms or increased operational activity. Deferred revenue higher dramatically in 2021 and remains strong in 2022, suggesting more customer advances or contract liabilities.
Operating Cash Flows: Net cash provided by operating activities rose strongly in 2021 and 2022, showing effective cash generation despite the volatility in net income. Adjustments to reconcile net income to cash flows also peaked in these years, likely due to noncash charges such as stock-based compensation and depreciation.
Investing Activities: Purchases of investments and property and equipment reflect substantial outflows, with fluctuations indicating changes in capital allocation strategies. Proceeds from maturity/call of investments dropped sharply in 2022 compared to prior years. The company engaged in strategic investments and acquisitions mainly before 2022, with net investing cash flows turning highly negative in 2022 after a positive spike in 2021, indicating a shift towards heavy investment or asset purchases.
Financing Activities: Financing cash flows show considerable variability, including significant equity offerings in 2018 and 2020, with a notable issuance of convertible senior notes and warrants in 2022. There is a marked increase in financing cash flow in 2022, reflecting large debt and equity transactions, partially offset by hedge purchases. Earlier periods reveal mixed inflows and outflows, illustrating changes in capital structure financing strategies.
Cash Position and Overall Liquidity: Overall cash and cash equivalents increased substantially from the beginning of 2018 through 2022, except for a drop in 2019 and a relatively flat year-end 2022 balance. The net increase in cash saw major upticks in 2018, 2021, followed by a marginal decrease in 2022, suggesting strong liquidity management despite fluctuating operational performance and investing outflows.

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Axon Enterprise Inc. (NASDAQ:AXON)

Cash Flow Statement