Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Axon Enterprise Inc., profitability ratios
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 profitability profile between 2018 and 2022 is characterized by a stark contrast between stable production efficiency and volatile bottom-line results. While the capacity to generate gross profit remained consistent, operational and net profitability experienced a multi-year decline before a significant recovery in the final year of the period.
- Gross Profitability
- Gross profit margins remained resilient and stable, fluctuating within a narrow range between 57.88% and 62.65%. This consistency indicates a steady ability to manage direct costs relative to revenue, regardless of the volatility observed in operating expenses.
- Operational and Net Profitability
- A significant downward trend occurred in operating and net margins from 2018 through 2021. Operating profit margin fell from 5.91% in 2018 to a low of -19.47% in 2021. Net profit margin followed a similar trajectory, dropping from 6.95% to -6.95% over the same period. However, 2022 marked a sharp reversal, with the operating margin returning to 7.84% and the net profit margin reaching a period high of 12.37%.
- Returns on Investment
- Return on Equity (ROE) and Return on Assets (ROA) mirrored the volatility of the net profit margin. Both metrics entered negative territory between 2020 and 2021, with ROE reaching its lowest point at -5.73%. By 2022, both metrics rebounded strongly, with ROE increasing to 11.60% and ROA rising to 5.16%, signaling a return to positive value generation for shareholders and improved asset utilization.
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Gross Profit Margin
Axon Enterprise Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Gross margin | 728,638) | 540,910) | 416,331) | 307,286) | 258,583) | |
| Net sales | 1,189,935) | 863,381) | 681,003) | 530,860) | 420,068) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 61.23% | 62.65% | 61.13% | 57.88% | 61.56% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | 5.26% | 4.84% | — | — | — | |
| Caterpillar Inc. | 26.91% | 26.30% | — | — | — | |
| Eaton Corp. plc | 33.19% | 32.28% | — | — | — | |
| GE Aerospace | 24.55% | 24.19% | — | — | — | |
| Honeywell International Inc. | 36.99% | 35.85% | — | — | — | |
| Lockheed Martin Corp. | 12.56% | 13.52% | — | — | — | |
| RTX Corp. | 20.38% | 19.40% | — | — | — | |
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).
1 2022 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × 728,638 ÷ 1,189,935 = 61.23%
2 Click competitor name to see calculations.
A consistent upward trajectory in both top-line revenue and absolute gross profit is observed between 2018 and 2022. Net sales grew from 420,068 thousand USD to 1,189,935 thousand USD, representing a significant expansion in market scale over the five-year period. Concurrent with this growth, gross margin in absolute terms rose from 258,583 thousand USD to 728,638 thousand USD.
- Revenue and Absolute Profit Growth
- Net sales exhibited uninterrupted year-over-year growth, nearly tripling from 2018 to 2022. This expansion was mirrored by the gross margin, which increased from 258,583 thousand USD in 2018 to 728,638 thousand USD in 2022, indicating that the company successfully scaled its operations while maintaining the ability to generate substantial profit before operating expenses.
- Gross Profit Margin Percentage Analysis
- The gross profit margin percentage demonstrated a high degree of stability, generally fluctuating within a narrow range. A temporary contraction occurred in 2019, where the margin declined to 57.88% from 61.56% in 2018. However, a recovery trend followed, with the margin ascending to 61.13% in 2020 and reaching a peak of 62.65% in 2021. By 2022, the margin settled at 61.23%, suggesting a sustainable and consistent cost-of-goods-sold structure relative to sales growth.
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Operating Profit Margin
Axon Enterprise Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Income (loss) from operations | 93,253) | (168,123) | (14,150) | (6,394) | 24,841) | |
| Net sales | 1,189,935) | 863,381) | 681,003) | 530,860) | 420,068) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 7.84% | -19.47% | -2.08% | -1.20% | 5.91% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | -5.33% | -4.66% | — | — | — | |
| Caterpillar Inc. | 13.97% | 14.27% | — | — | — | |
| Eaton Corp. plc | 14.55% | 15.69% | — | — | — | |
| GE Aerospace | 6.05% | 8.58% | — | — | — | |
| Honeywell International Inc. | 18.12% | 18.03% | — | — | — | |
| Lockheed Martin Corp. | 12.65% | 13.61% | — | — | — | |
| RTX Corp. | 8.07% | 7.70% | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Capital Goods | 8.29% | 9.11% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Industrials | 9.06% | 9.24% | — | — | — | |
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).
1 2022 Calculation
Operating profit margin = 100 × Income (loss) from operations ÷ Net sales
= 100 × 93,253 ÷ 1,189,935 = 7.84%
2 Click competitor name to see calculations.
The operational performance from 2018 through 2022 is characterized by consistent revenue expansion coupled with significant volatility in operating profitability, ending in a substantial recovery in the final fiscal year.
- Revenue Growth Trajectory
- Net sales exhibited a steady and aggressive increase throughout the period, rising from US$ 420,068 thousand in 2018 to US$ 1,189,935 thousand in 2022. This continuous growth indicates a strong expansion of the company's market scale.
- Operating Income Fluctuations
- Operating results transitioned from a profit of US$ 24,841 thousand in 2018 to a period of operational losses between 2019 and 2021. The losses intensified progressively, peaking in 2021 at US$ 168,123 thousand, before reversing sharply to an operating profit of US$ 93,253 thousand in 2022.
- Operating Profit Margin Analysis
- The operating profit margin reflected the instability of operating income, moving from 5.91% in 2018 to a significant low of -19.47% in 2021. The recovery observed in 2022, where the margin reached 7.84%, suggests a successful realignment of operating expenses relative to revenue, as the final margin exceeded the profitability level recorded at the start of the five-year period.
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Net Profit Margin
Axon Enterprise Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| 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% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | -7.41% | -6.75% | — | — | — | |
| Caterpillar Inc. | 11.85% | 13.47% | — | — | — | |
| Eaton Corp. plc | 11.86% | 10.92% | — | — | — | |
| GE Aerospace | 0.31% | -9.17% | — | — | — | |
| Honeywell International Inc. | 14.00% | 16.11% | — | — | — | |
| Lockheed Martin Corp. | 8.69% | 9.42% | — | — | — | |
| RTX Corp. | 7.75% | 6.00% | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Capital Goods | 5.27% | 3.71% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Industrials | 5.04% | 5.85% | — | — | — | |
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).
1 2022 Calculation
Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × 147,139 ÷ 1,189,935 = 12.37%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by consistent top-line growth contrasted with significant volatility in bottom-line profitability. While net sales expanded every year, net profit margins underwent a cycle of compression, a period of deficit, and a subsequent sharp recovery.
- Net Sales Trajectory
- A steady upward trend in revenue is evident, with net sales increasing from US$ 420,068 thousand in 2018 to US$ 1,189,935 thousand by the end of 2022. This indicates a consistent expansion of market reach or product adoption over the five-year period.
- Net Profit Margin Erosion
- Despite the increase in sales, the net profit margin declined sharply from 6.95% in 2018 to 0.17% in 2019, eventually turning negative. The margin reached its lowest point in 2021 at -6.95%, corresponding with a net loss of US$ 60,018 thousand, suggesting that operational expenses or strategic investments outpaced revenue growth during this phase.
- Profitability Rebound
- A significant reversal in profitability occurred in 2022, where the net profit margin rose to 12.37%. This recovery is reflected in the net income, which surged to US$ 147,139 thousand, the highest value in the analyzed period. This trend suggests a successful optimization of the cost structure or a shift toward higher-margin revenue streams.
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Return on Equity (ROE)
Axon Enterprise Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| 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% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 42.25% | 39.37% | — | — | — | |
| Eaton Corp. plc | 14.45% | 13.06% | — | — | — | |
| GE Aerospace | 0.62% | -16.17% | — | — | — | |
| Honeywell International Inc. | 29.74% | 29.85% | — | — | — | |
| Lockheed Martin Corp. | 61.86% | 57.62% | — | — | — | |
| RTX Corp. | 7.16% | 5.29% | — | — | — | |
| ROE, Sector | ||||||
| Capital Goods | 13.39% | 8.48% | — | — | — | |
| ROE, Industry | ||||||
| Industrials | 15.38% | 15.38% | — | — | — | |
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).
1 2022 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × 147,139 ÷ 1,268,491 = 11.60%
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by a period of significant volatility in net profitability contrasted with a steady, consistent expansion of the equity base.
- Equity Expansion
- Stockholders' equity demonstrated uninterrupted year-over-year growth, increasing from US$ 467.3 million in 2018 to US$ 1.27 billion in 2022. This growth trajectory indicates a sustained increase in the company's net asset value over the five-year period.
- Net Income Volatility
- Net income exhibited sharp fluctuations, beginning at US$ 29.2 million in 2018 and declining precipitously to US$ 882 thousand in 2019. The company entered a period of losses in 2020 and 2021, with the deficit peaking at US$ 60.0 million in 2021. A substantial recovery occurred in 2022, with net income surging to US$ 147.1 million.
- Return on Equity (ROE) Analysis
- The ROE trend closely mirrored the fluctuations in net income. From a starting point of 6.25% in 2018, the ratio declined to 0.16% in 2019 and became negative in 2020 (-0.18%) and 2021 (-5.73%). This downward trend reflects a period of diminishing returns on shareholder investment. However, 2022 saw a sharp reversal, with ROE climbing to 11.60%, the highest level recorded during the analyzed period.
The observed patterns suggest that while the company experienced a multi-year decline in profitability and negative returns on equity through 2021, it achieved a strong pivot in 2022. This recovery was realized despite a significantly larger equity base, indicating a marked improvement in the efficiency of generating profit from shareholder capital.
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Return on Assets (ROA)
Axon Enterprise Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| 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% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | -3.60% | -3.03% | — | — | — | |
| Caterpillar Inc. | 8.18% | 7.84% | — | — | — | |
| Eaton Corp. plc | 7.03% | 6.30% | — | — | — | |
| GE Aerospace | 0.12% | -3.28% | — | — | — | |
| Honeywell International Inc. | 7.97% | 8.60% | — | — | — | |
| Lockheed Martin Corp. | 10.84% | 12.41% | — | — | — | |
| RTX Corp. | 3.27% | 2.39% | — | — | — | |
| ROA, Sector | ||||||
| Capital Goods | 2.84% | 1.86% | — | — | — | |
| ROA, Industry | ||||||
| Industrials | 3.31% | 3.40% | — | — | — | |
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).
1 2022 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 147,139 ÷ 2,851,894 = 5.16%
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibits a volatile trend between 2018 and 2022, characterized by a progressive decline into negative territory followed by a significant recovery in the final year of the period.
- Profitability Trajectory
- Net income experienced a sharp contraction from 2018 through 2021, moving from a profit of $29.2 million to a net loss of $60.0 million. This downward trend culminated in 2021 before a substantial reversal occurred in 2022, where net income surged to $147.1 million.
- Asset Base Expansion
- A consistent and aggressive increase in total assets is observed over the five-year span. Assets grew from $719.5 million in 2018 to $2.85 billion in 2022, representing a nearly fourfold increase in the company's resource base.
- ROA Interpretation
- The ROA declined from 4.06% in 2018 to a low of -3.56% in 2021, indicating that the growth in assets was not accompanied by proportional earnings during this window. The recovery to 5.16% in 2022 demonstrates a marked improvement in asset utilization efficiency, as the company successfully translated its expanded asset base into its highest recorded net income for the period.
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