Name: Axon Enterprise Inc. (NASDAQ:AXON) | Cash Flow Statement
Creator: Stock Analysis on Net

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.

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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).

The financial trajectory from 2018 to 2022 is characterized by a significant expansion in operating cash flow, high volatility in net income, and a strategic shift in financing mechanisms. While the company experienced periods of net losses, specifically in 2020 and 2021, the ability to generate positive cash flow from operations remained consistent and accelerated toward the end of the period.

Operating Cash Flow Trends: Net cash provided by operating activities grew from 63.8 million in 2018 to 235.3 million in 2022. A notable divergence exists between net income and operating cash flow, particularly in 2021, where a net loss of 60 million was offset by 124.4 million in operating cash. This discrepancy is primarily attributed to substantial non-cash add-backs, most notably stock-based compensation, which peaked at 303.3 million in 2021. This indicates that operational cash generation is heavily supported by non-cash employee compensation expenses.
Working Capital and Revenue Recognition: Cash flow from operations has been periodically pressured by increases in accounts and notes receivable and contract assets, which reached a peak outflow of 205.7 million in 2021. However, this was partially mitigated by a surge in deferred revenue, which climbed from 54.2 million in 2018 to 175.6 million in 2021, before stabilizing at 159.7 million in 2022. This pattern suggests a transition toward a business model involving significant upfront payments or subscription-based contracts.
Investment Activity and Capital Expenditure: Investing activities are marked by aggressive management of marketable securities and strategic investments. The company shifted from modest investing outflows in 2018 to substantial volatility, culminating in a net outflow of 830.9 million in 2022. This was driven by 764.3 million in purchases of investments and 74.2 million in strategic investments. Capital expenditures for property and equipment also trended upward, increasing from 11.1 million in 2018 to 55.8 million in 2022, signaling sustained investment in physical infrastructure.
Financing and Capital Structure: The financing strategy evolved from equity-centric to debt-centric. Early liquidity was secured through equity offerings in 2018 and 2020. By 2022, the company pivoted toward debt financing, evidenced by the issuance of convertible senior notes totaling 673.7 million and warrants totaling 124.2 million. A significant portion of this liquidity was utilized for a convertible note hedge, costing 194.9 million, reflecting a sophisticated approach to managing interest and dilution risks.

Overall, the organization has transitioned into a phase of high operational cash generation and aggressive asset accumulation. The end-of-period cash position remained relatively stable, closing at 355.5 million in 2022, supported by a strategic shift toward convertible debt to fund investment activities and operational growth.

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