QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
, | |||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
☒ | Accelerated filer | ☐ | |||
Non-accelerated Filer | ☐ | Smaller reporting company | |||
Emerging growth company |
Page | |||
June 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | $ | |||||
Short-term investments | |||||||
Accounts and notes receivable, net of allowance of $1,577 and $1,882 as of June 30, 2019 and December 31, 2018, respectively | |||||||
Contract assets, net | |||||||
Inventory | |||||||
Prepaid expenses and other current assets | |||||||
Total current assets | |||||||
Property and equipment, net of accumulated depreciation of $42,822 and $39,885 as of June 30, 2019 and December 31, 2018, respectively | |||||||
Deferred income tax assets, net | |||||||
Intangible assets, net | |||||||
Goodwill | |||||||
Long-term notes receivable, net of current portion | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | $ | |||||
Accrued liabilities | |||||||
Current portion of deferred revenue | |||||||
Customer deposits | |||||||
Other current liabilities | |||||||
Total current liabilities | |||||||
Deferred revenue, net of current portion | |||||||
Liability for unrecognized tax benefits | |||||||
Long-term deferred compensation | |||||||
Other long-term liabilities | |||||||
Total liabilities | |||||||
Commitments and contingencies (Note 12) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of June 30, 2019 and December 31, 2018 | |||||||
Common stock, $0.00001 par value; 200,000,000 shares authorized; 59,251,731 and 58,810,637 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | |||||||
Additional paid-in capital | |||||||
Treasury stock at cost, 20,220,227 shares as of June 30, 2019 and December 31, 2018 | ( | ) | ( | ) | |||
Retained earnings | |||||||
Accumulated other comprehensive loss | ( | ) | ( | ) | |||
Total stockholders’ equity | |||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales from products | $ | $ | $ | $ | |||||||||||
Net sales from services | |||||||||||||||
Net sales | |||||||||||||||
Cost of product sales | |||||||||||||||
Cost of service sales | |||||||||||||||
Cost of sales | |||||||||||||||
Gross margin | |||||||||||||||
Operating expenses: | |||||||||||||||
Sales, general and administrative | |||||||||||||||
Research and development | |||||||||||||||
Total operating expenses | |||||||||||||||
Income (loss) from operations | ( | ) | |||||||||||||
Interest and other income (expense), net | ( | ) | |||||||||||||
Income before provision for income taxes | |||||||||||||||
Provision for (benefit from) income taxes | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net income | $ | $ | $ | $ | |||||||||||
Net income per common and common equivalent shares: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ | |||||||||||
Weighted average number of common and common equivalent shares outstanding: | |||||||||||||||
Basic | |||||||||||||||
Diluted | |||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | |||||||||
Comprehensive income | $ | $ | $ | $ |
Common Stock | Additional Paid-in Capital | Treasury Stock | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||
Balance, December 31, 2017 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||
Cumulative effect of applying a change in accounting principle | — | — | — | — | — | — | |||||||||||||||||||||||||
Issuance of common stock under employee plans | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Balance, March 31, 2018 | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
Issuance of common stock | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock for business combination | — | — | — | — | — | ||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | ( | ) | — | — | — | — | — | — | ( | ) | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||||
Balance, June 30, 2018 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||||||
Issuance of common stock under employee plans | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||||
Balance, March 31, 2019 | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
Issuance of common stock under employee plans | — | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||
Issuance of common stock for business combination contingent consideration | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||
Balance, June 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | |||||||
Loss on disposal and impairment of property and equipment, net | |||||||
Loss on disposal and abandonment of intangible assets | |||||||
Stock-based compensation | |||||||
Deferred income taxes | ( | ) | ( | ) | |||
Unrecognized tax benefits | |||||||
Other noncash, net | |||||||
Change in assets and liabilities: | |||||||
Accounts and notes receivable and contract assets | ( | ) | ( | ) | |||
Inventory | ( | ) | |||||
Prepaid expenses and other assets | ( | ) | ( | ) | |||
Accounts payable, accrued and other liabilities | ( | ) | ( | ) | |||
Deferred revenue | |||||||
Net cash provided by (used in) operating activities | ( | ) | |||||
Cash flows from investing activities: | |||||||
Purchases of investments | ( | ) | ( | ) | |||
Proceeds from maturity/call of investments | |||||||
Purchases of property and equipment | ( | ) | ( | ) | |||
Purchases of intangible assets | ( | ) | ( | ) | |||
Business acquisitions | ( | ) | |||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities: | |||||||
Net proceeds from equity offering | |||||||
Proceeds from options exercised | |||||||
Income and payroll tax payments for net-settled stock awards | ( | ) | ( | ) | |||
Payment of contingent consideration for a business acquisition | ( | ) | |||||
Net cash provided by (used in) financing activities | ( | ) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||
Supplemental disclosures: | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash (Note 1) | |||||||
Total cash, cash equivalents and restricted cash shown in the statements of cash flows | $ | $ | |||||
Cash paid for income taxes, net of refunds | $ | $ | |||||
Non-cash transactions | |||||||
Property and equipment purchases in accounts payable and accrued liabilities | $ | $ | |||||
Non-cash purchase consideration related to business combinations | $ | $ |
• | product warranty reserves, |
• | inventory valuation, |
• | revenue recognition, |
• | valuation of goodwill, intangible and long-lived assets, |
• | recognition, measurement and valuation of current and deferred income taxes, |
• | stock-based compensation, |
• | recognition and measurement of lease liabilities, |
• | recognition and measurement of contingencies and accrued litigation expense, and |
• | fair values of identified tangible and intangible assets acquired and liabilities assumed in business combinations. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Numerator for basic and diluted earnings per share: | |||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding | |||||||||||||||
Dilutive effect of stock-based awards | |||||||||||||||
Diluted weighted average shares outstanding | |||||||||||||||
Anti-dilutive stock-based awards excluded | |||||||||||||||
Net income per common share: | |||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||
Diluted | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Balance, beginning of period | $ | $ | |||||
Utilization of accrual | ( | ) | ( | ) | |||
Warranty expense | |||||||
Balance, end of period | $ | $ |
• | Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. |
• | Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. |
• | Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about inputs that market participants would use in pricing an asset or liability. |
December 31, 2018 | Impact of Adoption of Topic 842 on Opening Balance Sheet | January 1, 2019 | |||||||||
(As reported) | (As adjusted) | ||||||||||
Consolidated Balance Sheet Data: | |||||||||||
Other assets | $ | $ | $ | ||||||||
Total assets | |||||||||||
— | |||||||||||
Accrued liabilities | ( | ) | |||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Total liabilities and stockholders' equity |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||||||||||||
TASER | Software and Sensors | Total | TASER | Software and Sensors | Total | ||||||||||||||||||
TASER 7 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
TASER X26P | |||||||||||||||||||||||
TASER X2 | |||||||||||||||||||||||
TASER Pulse and Bolt | |||||||||||||||||||||||
Single cartridges | |||||||||||||||||||||||
Axon Body | |||||||||||||||||||||||
Axon Flex | |||||||||||||||||||||||
Axon Fleet | |||||||||||||||||||||||
Axon Dock | |||||||||||||||||||||||
Axon Evidence and cloud services | |||||||||||||||||||||||
TASER Cam | |||||||||||||||||||||||
Extended warranties | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||
TASER | Software and Sensors | Total | TASER | Software and Sensors | Total | ||||||||||||||||||
TASER 7 | $ | $ | $ | $ | $ | $ | |||||||||||||||||
TASER X26P | |||||||||||||||||||||||
TASER X2 | |||||||||||||||||||||||
TASER Pulse and Bolt | |||||||||||||||||||||||
Single cartridges | |||||||||||||||||||||||
Axon Body | |||||||||||||||||||||||
Axon Flex | |||||||||||||||||||||||
Axon Fleet | |||||||||||||||||||||||
Axon Dock | |||||||||||||||||||||||
Axon Evidence and cloud services | |||||||||||||||||||||||
TASER Cam | |||||||||||||||||||||||
Extended warranties | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
United States | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||
Other countries | |||||||||||||||||||||||||||
Total | $ | % | $ | % | $ | % | $ | % |
June 30, 2019 | |||
Contract assets, net | $ | ||
Contract liabilities (deferred revenue) | |||
Revenue recognized in the period from: | |||
Amounts included in contract liabilities at the beginning of the period |
June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||
Current | Long-Term | Total | Current | Long-Term | Total | ||||||||||||||||||
Warranty: | |||||||||||||||||||||||
TASER | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Software and Sensors | |||||||||||||||||||||||
Hardware: | |||||||||||||||||||||||
TASER | |||||||||||||||||||||||
Software and Sensors | |||||||||||||||||||||||
Services: | |||||||||||||||||||||||
TASER | |||||||||||||||||||||||
Software and Sensors | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||
Current | Long-Term | Total | Current | Long-Term | Total | ||||||||||||||||||
TASER | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Software and Sensors | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
As of June 30, 2019 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments | ||||||||||||||||||
Cash | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | |||||||||||||||||||||||
Level 2: | |||||||||||||||||||||||
Corporate bonds | ( | ) | |||||||||||||||||||||
Total | $ | $ | $ | ( | ) | $ | $ | $ |
As of December 31, 2018 | |||||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Cash and Cash Equivalents | Short-Term Investments | ||||||||||||||||||
Cash | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Level 1: | |||||||||||||||||||||||
Money market funds | |||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Raw materials | $ | $ | |||||
Finished goods | |||||||
Total inventory | $ | $ |
TASER | Software and Sensors | Total | |||||||||
Balance, beginning of period | $ | $ | $ | ||||||||
Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | |||||
Balance, end of period | $ | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||||||||||||||||||||
Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
Amortizable (definite-lived) intangible assets: | |||||||||||||||||||||||||
Domain names | 5-10 years | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
Issued patents | 4-15 years | ( | ) | ( | ) | ||||||||||||||||||||
Issued trademarks | 3-11 years | ( | ) | ( | ) | ||||||||||||||||||||
Customer relationships | 4-8 years | ( | ) | ( | ) | ||||||||||||||||||||
Non-compete agreements | 3-4 years | ( | ) | ( | ) | ||||||||||||||||||||
Developed technology | 3-7 years | ( | ) | ( | ) | ||||||||||||||||||||
Re-acquired distribution rights | 2 years | ( | ) | ( | ) | ||||||||||||||||||||
Total amortizable | ( | ) | ( | ) | |||||||||||||||||||||
Not amortizable (indefinite-lived) intangible assets: | |||||||||||||||||||||||||
TASER trademark | |||||||||||||||||||||||||
Patents and trademarks pending | |||||||||||||||||||||||||
Total not amortizable | |||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ |
2019 Remaining | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
Thereafter | |||
Total | $ |
June 30, 2019 | December 31, 2018 | ||||||
Cash surrender value of corporate-owned life insurance policies | $ | $ | |||||
Deferred commissions (1) | |||||||
Restricted cash | |||||||
Operating lease assets | — | ||||||
Prepaid expenses, deposits and other | |||||||
Total other long-term assets | $ | $ |
June 30, 2019 | December 31, 2018 | ||||||
Accrued salaries, benefits and bonus | $ | $ | |||||
Accrued professional, consulting and lobbying fees | |||||||
Accrued warranty expense | |||||||
Accrued income and other taxes | |||||||
Other accrued liabilities | |||||||
Accrued liabilities | $ | $ |
Eight Separate Revenue Goals (1) (in thousands) | Eight Separate Adjusted EBITDA (CEO Performance Award) Goals (in thousands) | |
Goal #1, $710,058 | Goal #9, $125,000 | |
Goal #2, $860,058 | Goal #10, $155,000 | |
Goal #3, $1,010,058 | Goal #11, $175,000 | |
Goal #4, $1,210,058 | Goal #12, $190,000 | |
Goal #5, $1,410,058 | Goal #13, $200,000 | |
Goal #6, $1,610,058 | Goal #14, $210,000 | |
Goal #7, $1,810,058 | Goal #15, $220,000 | |
Goal #8, $2,010,058 | Goal #16, $230,000 |
• | Total revenue of $ |
• | Adjusted EBITDA (CEO Performance Award) of $ |
Number of Units | Weighted Average Grant-Date Fair Value | Aggregate Intrinsic Value | ||||||||
Units outstanding, beginning of year | $ | |||||||||
Granted | ||||||||||
Released | ( | ) | ||||||||
Forfeited | ( | ) | ||||||||
Units outstanding, end of period | $ |
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | |||||||||
Options outstanding, beginning of year | $ | |||||||||||
Granted | ||||||||||||
Exercised | ( | ) | ||||||||||
Expired / terminated | ||||||||||||
Options outstanding, end of period | $ | |||||||||||
Options exercisable, end of period |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Cost of products sold and services delivered | $ | $ | $ | $ | |||||||||||
Sales, general and administrative expenses | |||||||||||||||
Research and development expenses | |||||||||||||||
Total stock-based compensation expense | $ | $ | $ | $ |
Leases (in thousands) | Classification | June 30, 2019 | ||||
Assets | ||||||
Operating lease assets | Other assets | $ | ||||
Liabilities | ||||||
Current | ||||||
Operating | Other current liabilities | $ | ||||
Noncurrent | ||||||
Operating | Other long-term liabilities | |||||
Total lease liabilities | $ |
Classification | Three Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||||
Operating lease expense (1) | Sales, general and administrative expenses (2) | $ | $ | |||||||
Sublease income | Other income | ( | ) | ( | ) | |||||
Net lease expense | $ | $ |
Six Months Ended June 30, 2019 | ||||
Supplemental Cash Flows Information | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows from operating leases | $ | |||
Right-of-use assets obtained in exchange for lease liabilities: | ||||
Operating leases | ||||
Weighted average remaining lease term: | ||||
Operating leases | ||||
Weighted average discount rate: | ||||
Operating leases | % |
Operating | Sublease income | Net | |||||||||
2019 Remaining | $ | $ | ( | ) | $ | ||||||
2020 | ( | ) | |||||||||
2021 | |||||||||||
2022 | |||||||||||
2023 | |||||||||||
2024 | |||||||||||
Thereafter | |||||||||||
Total minimum lease payments | ( | ) | |||||||||
Less: Amount representing interest | ( | ) | |||||||||
Present value of lease payments | $ |
Operating | Capital | ||||||
2019 | $ | $ | |||||
2020 | |||||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
Thereafter | |||||||
Total minimum lease payments | $ | ||||||
Less: Amount representing interest | ( | ) | |||||
Capital lease obligation | $ |
Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | ||||||||||||||||||||||
TASER | Software and Sensors 1 | Total | TASER | Software and Sensors | Total | ||||||||||||||||||
Net sales from products | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net sales from services | |||||||||||||||||||||||
Net sales | |||||||||||||||||||||||
Cost of product sales | |||||||||||||||||||||||
Cost of service sales | |||||||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Gross margin | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Research and development | $ | $ | $ | $ | $ | $ |
Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | ||||||||||||||||||||||
TASER | Software and Sensors 1 | Total | TASER | Software and Sensors | Total | ||||||||||||||||||
Net sales from products | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Net sales from services | |||||||||||||||||||||||
Net sales | |||||||||||||||||||||||
Cost of product sales | |||||||||||||||||||||||
Cost of service sales | |||||||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Gross margin | $ | $ | $ | $ | $ | $ | |||||||||||||||||
Research and development | $ | $ | $ | $ | $ | $ |
Three Months Ended June 30, | |||||||||||||
2019 | 2018 | ||||||||||||
Net sales from products | $ | 80,391 | 71.5 | % | $ | 76,721 | 77.3 | % | |||||
Net sales from services | 31,971 | 28.5 | 22,505 | 22.7 | |||||||||
Net sales | 112,362 | 100.0 | 99,226 | 100.0 | |||||||||
Cost of product sales | 38,220 | 34.0 | 31,087 | 31.4 | |||||||||
Cost of service sales | 8,582 | 7.6 | 4,996 | 5.0 | |||||||||
Cost of sales | 46,802 | 41.6 | 36,083 | 36.4 | |||||||||
Gross margin | 65,560 | 58.4 | 63,143 | 63.6 | |||||||||
Operating expenses: | |||||||||||||
Sales, general and administrative | 43,362 | 38.6 | 39,343 | 39.6 | |||||||||
Research and development | 23,493 | 20.9 | 18,501 | 18.6 | |||||||||
Total operating expenses | 66,855 | 59.5 | 57,844 | 58.2 | |||||||||
Income (loss) from operations | (1,295 | ) | (1.1 | ) | 5,299 | 5.4 | |||||||
Interest and other income (expense), net | 1,845 | 1.6 | (295 | ) | (0.3 | ) | |||||||
Income before provision for income taxes | 550 | 0.5 | 5,004 | 5.1 | |||||||||
Provision for (benefit from) income taxes | (188 | ) | (0.2 | ) | (3,481 | ) | (3.5 | ) | |||||
Net income | $ | 738 | 0.7 | % | $ | 8,485 | 8.6 | % |
Three Months Ended June 30, | |||||||||||||
2019 | 2018 | ||||||||||||
United States | $ | 93,594 | 83 | % | $ | 78,731 | 79 | % | |||||
Other countries | 18,768 | 17 | 20,495 | 21 | |||||||||
Total | $ | 112,362 | 100 | % | $ | 99,226 | 100 | % |
Three Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
TASER segment: | ||||||||||||||||||||
TASER 7 | $ | 9,298 | 8.3 | % | $ | — | — | % | $ | 9,298 | * | |||||||||
TASER X26P | 10,382 | 9.2 | 18,146 | 18.3 | (7,764 | ) | (42.8 | ) | ||||||||||||
TASER X2 | 14,087 | 12.5 | 18,362 | 18.5 | (4,275 | ) | (23.3 | ) | ||||||||||||
TASER Pulse and Bolt | 1,118 | 1.0 | 1,101 | 1.1 | 17 | 1.5 | ||||||||||||||
Single cartridges | 19,293 | 17.3 | 17,243 | 17.4 | 2,050 | 11.9 | ||||||||||||||
Axon Evidence and cloud services | 109 | 0.1 | — | — | 109 | * | ||||||||||||||
Extended warranties | 4,482 | 4.0 | 3,738 | 3.8 | 744 | 19.9 | ||||||||||||||
Other | 1,803 | 1.6 | 2,034 | 2.0 | (231 | ) | (11.4 | ) | ||||||||||||
Total TASER segment | 60,572 | 54.0 | 60,624 | 61.1 | (52 | ) | (0.1 | ) | ||||||||||||
Software and Sensors segment: | ||||||||||||||||||||
Axon Body | 5,612 | 5.0 | 4,780 | 4.8 | 832 | 17.4 | ||||||||||||||
Axon Flex | 1,623 | 1.4 | 1,535 | 1.5 | 88 | 5.7 | ||||||||||||||
Axon Fleet | 3,120 | 2.8 | 2,715 | 2.7 | 405 | 14.9 | ||||||||||||||
Axon Dock | 2,731 | 2.4 | 2,119 | 2.1 | 612 | 28.9 | ||||||||||||||
Axon Evidence and cloud services | 31,821 | 28.3 | 20,357 | 20.6 | 11,464 | 56.3 | ||||||||||||||
TASER Cam | 1,044 | 0.9 | 762 | 0.8 | 282 | 37.0 | ||||||||||||||
Extended warranties | 4,420 | 3.9 | 2,870 | 2.9 | 1,550 | 54.0 | ||||||||||||||
Other | 1,419 | 1.3 | 3,464 | 3.5 | (2,045 | ) | (59.0 | ) | ||||||||||||
Total Software and Sensors segment | 51,790 | 46.0 | 38,602 | 38.9 | 13,188 | 34.2 | ||||||||||||||
Total net sales | $ | 112,362 | 100.0 | % | $ | 99,226 | 100.0 | % | $ | 13,136 | 13.2 | % |
Three Months Ended June 30, | Unit Change | Percent Change | |||||||||
2019 | 2018 | ||||||||||
TASER 7 | 8,135 | — | 8,135 | * | |||||||
TASER X26P | 9,493 | 18,664 | (9,171 | ) | (49.1 | ) | |||||
TASER X2 | 9,759 | 15,537 | (5,778 | ) | (37.2 | ) | |||||
TASER Pulse and Bolt | 3,631 | 3,158 | 473 | 15.0 | |||||||
Cartridges | 606,220 | 611,136 | (4,916 | ) | (0.8 | ) | |||||
Axon Body | 20,346 | 20,407 | (61 | ) | (0.3 | ) | |||||
Axon Flex | 3,508 | 3,281 | 227 | 6.9 | |||||||
Axon Fleet | 2,441 | 2,079 | 362 | 17.4 | |||||||
Axon Dock | 3,408 | 4,534 | (1,126 | ) | (24.8 | ) | |||||
TASER Cam | 1,716 | 1,491 | 225 | 15.1 |
Three Months Ended June 30, | Dollar Change | Percent Change | |||||||||||
2019 | 2018 | ||||||||||||
Total sales, general and administrative expenses | $ | 43,362 | $ | 39,343 | $ | 4,019 | 10.2 | ||||||
Sales, general, and administrative as a percentage of net sales | 38.6 | % | 39.6 | % |
Three Months Ended June 30, | Dollar Change | Percent Change | |||||||||||
2019 | 2018 | ||||||||||||
Total research and development expenses | $ | 23,493 | $ | 18,501 | $ | 4,992 | 27.0 | ||||||
Research and development as a percentage of net sales | 20.9 | % | 18.6 | % |
Three Months Ended June 30, 2019 | Three Months Ended March 31, 2019 | Dollar Change | Percent Change | |||||||||||||||||
TASER segment: | ||||||||||||||||||||
TASER 7 | $ | 9,298 | 8.3 | % | $ | 9,954 | 8.6 | % | $ | (656 | ) | (6.6 | )% | |||||||
TASER X26P | 10,382 | 9.2 | 15,872 | 13.7 | (5,490 | ) | (34.6 | ) | ||||||||||||
TASER X2 | 14,087 | 12.5 | 13,085 | 11.3 | 1,002 | 7.7 | ||||||||||||||
TASER Pulse and Bolt | 1,118 | 1.0 | 670 | 0.6 | 448 | 66.9 | ||||||||||||||
Single cartridges | 19,293 | 17.3 | 19,160 | 16.6 | 133 | 0.7 | ||||||||||||||
Axon Evidence and cloud services | 109 | 0.1 | 36 | — | 73 | * | ||||||||||||||
Extended warranties | 4,482 | 4.0 | 4,316 | 3.7 | 166 | 3.8 | ||||||||||||||
Other | 1,803 | 1.6 | 2,298 | 2.0 | (495 | ) | (21.5 | ) | ||||||||||||
Total TASER segment | 60,572 | 54.0 | 65,391 | 56.5 | (4,819 | ) | (7.4 | ) | ||||||||||||
Software and Sensors segment: | ||||||||||||||||||||
Axon Body | 5,612 | 5.0 | 6,445 | 5.6 | (833 | ) | (12.9 | ) | ||||||||||||
Axon Flex | 1,623 | 1.4 | 1,224 | 1.1 | 399 | 32.6 | ||||||||||||||
Axon Fleet | 3,120 | 2.8 | 3,516 | 3.0 | (396 | ) | (11.3 | ) | ||||||||||||
Axon Dock | 2,731 | 2.4 | 3,312 | 2.9 | (581 | ) | (17.5 | ) | ||||||||||||
Axon Evidence and cloud services | 31,821 | 28.3 | 27,618 | 23.7 | 4,203 | 15.2 | ||||||||||||||
TASER Cam | 1,044 | 0.9 | 903 | 0.8 | 141 | 15.6 | ||||||||||||||
Extended warranties | 4,420 | 3.9 | 4,930 | 4.3 | (510 | ) | (10.3 | ) | ||||||||||||
Other | 1,419 | 1.3 | 2,471 | 2.1 | (1,052 | ) | (42.6 | ) | ||||||||||||
Total Software and Sensors segment | 51,790 | 46.0 | 50,419 | 43.5 | 1,371 | 2.7 | ||||||||||||||
Total net sales | $ | 112,362 | 100.0 | % | $ | 115,810 | 100.0 | % | $ | (3,448 | ) | (3.0 | )% |
Three Months Ended June 30, 2019 | Three Months Ended March 31, 2019 | Unit Change | Percent Change | ||||||||
TASER 7 | 8,135 | 8,835 | (700 | ) | (7.9 | )% | |||||
TASER X26P | 9,493 | 14,985 | (5,492 | ) | (36.6 | ) | |||||
TASER X2 | 9,759 | 9,861 | (102 | ) | (1.0 | ) | |||||
TASER Pulse and Bolt | 3,631 | 1,253 | 2,378 | 189.8 | |||||||
Cartridges | 606,220 | 616,517 | (10,297 | ) | (1.7 | ) | |||||
Axon Body | 20,346 | 25,848 | (5,502 | ) | (21.3 | ) | |||||
Axon Flex | 3,508 | 3,591 | (83 | ) | (2.3 | ) | |||||
Axon Fleet | 2,441 | 1,735 | 706 | 40.7 | |||||||
Axon Dock | 3,408 | 4,994 | (1,586 | ) | (31.8 | ) | |||||
TASER Cam | 1,716 | 1,741 | (25 | ) | (1.4 | ) |
Six Months Ended June 30, | |||||||||||||
2019 | 2018 | ||||||||||||
Net sales from products | $ | 168,480 | 73.8 | % | $ | 157,695 | 78.7 | % | |||||
Net sales from services | 59,692 | 26.2 | 42,746 | 21.3 | |||||||||
Net sales | 228,172 | 100.0 | 200,441 | 100.0 | |||||||||
Cost of product sales | 77,820 | 34.1 | 63,521 | 31.7 | |||||||||
Cost of service sales | 15,875 | 7.0 | 9,316 | 4.6 | |||||||||
Cost of sales | 93,695 | 41.1 | 72,837 | 36.3 | |||||||||
Gross margin | 134,477 | 58.9 | 127,604 | 63.7 | |||||||||
Operating expenses: | |||||||||||||
Sales, general and administrative | 86,254 | 37.8 | 75,102 | 37.5 | |||||||||
Research and development | 46,847 | 20.5 | 33,620 | 16.8 | |||||||||
Total operating expenses | 133,101 | 58.3 | 108,722 | 54.3 | |||||||||
Income from operations | 1,376 | 0.6 | 18,882 | 9.4 | |||||||||
Interest and other income, net | 4,158 | 1.8 | 968 | 0.5 | |||||||||
Income before provision for income taxes | 5,534 | 2.4 | 19,850 | 9.9 | |||||||||
Provision for (benefit from) income taxes | (1,623 | ) | (0.7 | ) | (1,561 | ) | (0.8 | ) | |||||
Net income | $ | 7,157 | 3.1 | % | $ | 21,411 | 10.7 | % |
Six Months Ended June 30, | |||||||||||||
2019 | 2018 | ||||||||||||
United States | $ | 187,927 | 82 | % | $ | 156,681 | 78 | % | |||||
Other countries | 40,245 | 18 | 43,760 | 22 | |||||||||
Total | $ | 228,172 | 100 | % | $ | 200,441 | 100 | % |
Six Months Ended June 30, | Dollar Change | Percent Change | ||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
TASER segment: | ||||||||||||||||||||
TASER 7 | $ | 19,252 | 8.4 | % | $ | — | — | % | $ | 19,252 | * | |||||||||
TASER X26P | 26,254 | 11.5 | 34,620 | 17.3 | (8,366 | ) | (24.2 | ) | ||||||||||||
TASER X2 | 27,172 | 11.9 | 42,294 | 21.1 | (15,122 | ) | (35.8 | ) | ||||||||||||
TASER Pulse and Bolt | 1,788 | 0.8 | 2,447 | 1.2 | (659 | ) | (26.9 | ) | ||||||||||||
Single cartridges | 38,453 | 16.8 | 33,357 | 16.6 | 5,096 | 15.3 | ||||||||||||||
Axon Evidence and cloud services | 145 | 0.1 | — | — | 145 | * | ||||||||||||||
Extended warranties | 8,798 | 3.9 | 7,444 | 3.7 | 1,354 | 18.2 | ||||||||||||||
Other | 4,101 | 1.8 | 3,986 | 2.0 | 115 | 2.9 | ||||||||||||||
Total TASER segment | 125,963 | 55.2 | 124,148 | 61.9 | 1,815 | 1.5 | ||||||||||||||
Software and Sensors segment: | ||||||||||||||||||||
Axon Body | 12,057 | 5.3 | 10,338 | 5.2 | 1,719 | 16.6 | ||||||||||||||
Axon Flex | 2,847 | 1.2 | 3,204 | 1.6 | (357 | ) | (11.1 | ) | ||||||||||||
Axon Fleet | 6,636 | 2.9 | 4,831 | 2.4 | 1,805 | 37.4 | ||||||||||||||
Axon Dock | 6,043 | 2.6 | 5,154 | 2.6 | 889 | 17.2 | ||||||||||||||
Axon Evidence and cloud services | 59,439 | 26.1 | 40,598 | 20.2 | 18,841 | 46.4 | ||||||||||||||
TASER Cam | 1,947 | 0.9 | 2,122 | 1.1 | (175 | ) | (8.2 | ) | ||||||||||||
Extended warranties | 9,350 | 4.1 | 5,360 | 2.7 | 3,990 | 74.4 | ||||||||||||||
Other | 3,890 | 1.7 | 4,686 | 2.3 | (796 | ) | (17.0 | ) | ||||||||||||
Total Software and Sensors segment | 102,209 | 44.8 | 76,293 | 38.1 | 25,916 | 34.0 | ||||||||||||||
Total net sales | $ | 228,172 | 100.0 | % | $ | 200,441 | 100.0 | % | $ | 27,731 | 13.8 | % |
Six Months Ended June 30, | Unit Change | Percent Change | |||||||||
2019 | 2018 | ||||||||||
TASER 7 | 16,970 | — | 16,970 | * | |||||||
TASER X26P | 24,478 | 34,384 | (9,906 | ) | (28.8 | ) | |||||
TASER X2 | 19,620 | 36,038 | (16,418 | ) | (45.6 | ) | |||||
TASER Pulse and Bolt | 4,884 | 7,158 | (2,274 | ) | (31.8 | ) | |||||
Cartridges | 1,222,737 | 1,144,088 | 78,649 | 6.9 | |||||||
Axon Body | 46,194 | 42,176 | 4,018 | 9.5 | |||||||
Axon Flex | 7,099 | 6,974 | 125 | 1.8 | |||||||
Axon Fleet | 4,176 | 3,936 | 240 | 6.1 | |||||||
Axon Dock | 8,402 | 10,378 | (1,976 | ) | (19.0 | ) | |||||
TASER Cam | 3,457 | 5,019 | (1,562 | ) | (31.1 | ) |
Six Months Ended June 30, | Dollar Change | Percent Change | |||||||||||
2019 | 2018 | ||||||||||||
Total sales, general and administrative expenses | $ | 86,254 | $ | 75,102 | $ | 11,152 | 14.8 | ||||||
Sales, general, and administrative as a percentage of net sales | 37.8 | % | 37.5 | % |
Six Months Ended June 30, | Dollar Change | Percent Change | |||||||||||
2019 | 2018 | ||||||||||||
Total research and development expenses | $ | 46,847 | $ | 33,620 | $ | 13,227 | 39.3 | ||||||
Research and development as a percentage of net sales | 20.5 | % | 16.8 | % |
• | EBITDA (Most comparable GAAP Measure: Net income) - Earnings before interest expense, investment interest income, taxes, depreciation and amortization. |
• | Adjusted EBITDA (CEO Performance Award) (Most comparable GAAP Measure: Net income) - Earnings before interest expense, investment interest income, taxes, depreciation, amortization and non-cash stock-based compensation expense. |
• | these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to our GAAP financial measures; |
• | these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, our GAAP financial measures; |
• | these non-GAAP financial measures should not be considered to be superior to our GAAP financial measures; and |
• | these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this Quarterly Report on Form 10-Q were prepared under a comprehensive set of rules or principles. |
Three Months Ended | Six Months Ended | ||||||||||||||||||
June 30, 2019 | March 31, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||||||||||||
Net income | $ | 738 | $ | 6,419 | $ | 8,485 | $ | 7,157 | $ | 21,411 | |||||||||
Depreciation and amortization | 2,687 | 2,800 | 2,750 | 5,487 | 5,161 | ||||||||||||||
Interest expense | 17 | 6 | 17 | 23 | 37 | ||||||||||||||
Investment interest income | (1,630 | ) | (2,003 | ) | (595 | ) | (3,633 | ) | (670 | ) | |||||||||
Provision for (benefit from) income taxes | (188 | ) | (1,435 | ) | (3,481 | ) | (1,623 | ) | (1,561 | ) | |||||||||
EBITDA | $ | 1,624 | $ | 5,787 | $ | 7,176 | $ | 7,411 | $ | 24,378 | |||||||||
Adjustments: | |||||||||||||||||||
Stock-based compensation expense | 8,627 | 7,905 | 4,954 | 16,532 | 9,047 | ||||||||||||||
Adjusted EBITDA (CEO Performance Award) | $ | 10,251 | $ | 13,692 | $ | 12,130 | $ | 23,943 | $ | 33,425 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Net cash provided by (used in) operating activities | $ | (2,576 | ) | $ | 16,106 | ||
Net cash used in investing activities | (124,878 | ) | (7,226 | ) | |||
Net cash provided by (used in) financing activities | (2,028 | ) | 223,197 | ||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (252 | ) | (538 | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | (129,734 | ) | $ | 231,539 |
10.1 | ||
10.2 | ||
10.3 | ||
31.1* | ||
31.2* | ||
32** | ||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | The cover page from the Company's Quarterly Report for the quarter ended June 30, 2019, formatted in Inline XBRL |
AXON ENTERPRISE, INC. | ||||
Date: | August 9, 2019 | |||
By: | /s/ PATRICK W. SMITH | |||
Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: | August 9, 2019 | By: | /s/ JAWAD A. AHSAN | |
Chief Financial Officer | ||||
(Principal Financial and | ||||
Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 of Axon Enterprise, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2019 | By: | /s/ Patrick W. Smith | |
Patrick W. Smith | ||||
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019 of Axon Enterprise, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 9, 2019 | By: | /s/ Jawad A. Ahsan | |
Jawad A. Ahsan | ||||
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Patrick W. Smith | |
Patrick W. Smith | |
Chief Executive Officer | |
August 9, 2019 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Jawad A. Ahsan | |
Jawad A. Ahsan | |
Chief Financial Officer | |
August 9, 2019 |
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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance on accounts receivable | $ 1,577 | $ 1,882 |
Accumulated depreciation | $ 42,822 | $ 39,885 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 59,251,731 | 58,810,637 |
Common stock, shares outstanding (in shares) | 59,251,731 | 58,810,637 |
Treasury stock, shares (in shares) | 20,220,227 | 20,220,227 |
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
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Net sales | $ 112,362 | $ 99,226 | $ 228,172 | $ 200,441 |
Cost of sales | 46,802 | 36,083 | 93,695 | 72,837 |
Gross margin | 65,560 | 63,143 | 134,477 | 127,604 |
Operating expenses: | ||||
Sales, general and administrative | 43,362 | 39,343 | 86,254 | 75,102 |
Research and development | 23,493 | 18,501 | 46,847 | 33,620 |
Total operating expenses | 66,855 | 57,844 | 133,101 | 108,722 |
Income (loss) from operations | (1,295) | 5,299 | 1,376 | 18,882 |
Interest and other income (expense), net | 1,845 | (295) | 4,158 | 968 |
Income before provision for income taxes | 550 | 5,004 | 5,534 | 19,850 |
Provision for (benefit from) income taxes | (188) | (3,481) | (1,623) | (1,561) |
Net income | $ 738 | $ 8,485 | $ 7,157 | $ 21,411 |
Net income per common and common equivalent shares: | ||||
Basic (in dollars per share) | $ 0.01 | $ 0.15 | $ 0.12 | $ 0.39 |
Diluted (in dollars per share) | $ 0.01 | $ 0.15 | $ 0.12 | $ 0.38 |
Weighted average number of common and common equivalent shares outstanding: | ||||
Basic (in shares) | 59,187 | 55,527 | 59,051 | 54,330 |
Diluted (in shares) | 60,000 | 57,054 | 59,876 | 55,892 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 738 | $ 8,485 | $ 7,157 | $ 21,411 |
Foreign currency translation adjustments | (108) | 655 | (58) | (52) |
Comprehensive income | 630 | 9,140 | 7,099 | 21,359 |
Product | ||||
Net sales | 80,391 | 76,721 | 168,480 | 157,695 |
Cost of sales | 38,220 | 31,087 | 77,820 | 63,521 |
Service | ||||
Net sales | 31,971 | 22,505 | 59,692 | 42,746 |
Cost of sales | $ 8,582 | $ 4,996 | $ 15,875 | $ 9,316 |
Organization and Summary of Significant Accounting Policies |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Axon Enterprise, Inc. (“Axon,” the “Company,” "we," or "us") is a market-leading provider of law enforcement technology solutions. Our core mission is to protect life. We fulfill that mission through developing hardware and software products that advance the long term objectives of a) obsoleting the bullet, b) reducing social conflict, and c) enabling a fair and effective justice system. Our headquarters in Scottsdale, Arizona houses our executive management, sales, marketing, certain engineering, manufacturing, and other administrative support functions. We also have a software engineering development center located in Seattle, Washington, and subsidiaries located in Australia, Canada, Finland, Hong Kong, Germany, India, Italy, the Netherlands, the United Kingdom, and Vietnam. The accompanying unaudited condensed consolidated financial statements include the accounts of Axon Enterprise, Inc. and our wholly owned subsidiaries. All material intercompany accounts, transactions, and profits have been eliminated. Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2018, as filed on Form 10-K, with the exception of our adoption of certain accounting pronouncements which we describe below. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2018. The results of operations for the six months ended June 30, 2019 and 2018 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include:
Actual results could differ materially from those estimates. Segment Information Our operations are comprised of two reportable segments: the manufacture and sale of conducted electrical weapons ("CEWs"), batteries, accessories, extended warranties and other products and services (the “TASER” segment); and the development, manufacture, and sale of software and sensors, which includes the sale of devices, wearables, applications, cloud and mobile products (collectively, the “Software and Sensors” segment). Revenue from our “products” in the Software and Sensors segment are generally from sales of sensors, including on-officer body cameras, Axon Fleet cameras, other hardware sensors, warranties on sensors, and other products, and is sometimes referred to as "Sensors and Other revenue." Revenue from our “services” in the Software and Sensors segment comprise sales related to the Axon Cloud, which includes Axon Evidence, cloud-based evidence management software revenue, other recurring cloud-hosted software revenue and related professional services, and is sometimes referred to as "Axon Cloud revenue." Within the Software and Sensors segment, we include only revenues and costs attributable to that segment, which costs include: costs of sales for both products and services, direct labor, product management and research and development ("R&D") for products included, or to be included, within the Software and Sensors segment. All other costs are included in the TASER segment. Our Chief Executive Officer, who is the Chief Operating Decision Maker (the “CODM”), is not provided asset information or sales, general, and administrative expense by segment. Reportable segments are determined based on discrete financial information reviewed by the CODM. We organize and review operations based on products and services. We perform an analysis of our reportable segments on at least an annual basis. Additional information related to our business segments is summarized in Note 15. Geographic Information and Major Customers / Suppliers For the three and six months ended June 30, 2019 and 2018, no individual country outside the U.S. represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three and six months ended June 30, 2019 and 2018, no customer represented more than 10% of total net sales. At June 30, 2019 and December 31, 2018, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the U.S., Mexico, China, Taiwan, Vietnam, Canada, Germany and Israel. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases without incurring significant production delays. We also strategically hold safety stock levels on custom components to further reduce this risk. For off the shelf components, we believe that in most cases there are readily available alternative suppliers who can consistently meet our needs for these components. We acquire most of our components on a purchase order basis and do not have any significant long-term contracts with component suppliers. Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Potentially dilutive securities include outstanding stock options and unvested restricted stock units ("RSUs"). The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data):
Standard Warranties We warranty our CEWs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will repair or replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated based on historical data related to warranty claims on a quarterly basis and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying condensed consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands):
Fair Value Measurements and Financial Instruments The fair value framework prioritizes the inputs to valuation techniques for measuring financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
We have cash equivalents and investments, which at June 30, 2019 and December 31, 2018 were comprised of money market funds and, at June 30, 2019, also included corporate bonds. See additional disclosure regarding the fair value of our cash equivalents and investments in Note 3. Included in the balance of other assets as of June 30, 2019 and December 31, 2018 was $4.0 million and $3.6 million, respectively, related to corporate-owned life insurance policies which are used to fund our deferred compensation plan. We determine the fair value of insurance contracts by obtaining the cash surrender value of the contracts from the issuer, a Level 2 valuation technique. Our financial instruments also include accounts and notes receivable, contract assets, accounts payable and accrued liabilities. As these instruments are generally short-term in nature, their carrying values approximate their fair values on the accompanying condensed consolidated balance sheets. Restricted Cash Restricted cash balances as of June 30, 2019 and December 31, 2018 included $0.9 million of sales proceeds related to long-term contracts with customers, which were included in prepaid expenses and other current assets on our condensed consolidated balance sheets. The proceeds are held in escrow until certain billing milestones are achieved, and then specified amounts are transferred to our operating accounts. Restricted cash balances as of June 30, 2019 and December 31, 2018 also included $0.7 million related to a performance guarantee for an international customer sales contract, which were included in other assets on our accompanying condensed consolidated balance sheets. Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such circumstances could include, but are not limited to, a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. During the three months ended June 30, 2019, we abandoned certain capitalized software related to implementation work on an enterprise resource planning system conversion, resulting in an impairment charge of $1.3 million, which was included in sales, general and administrative expense in the accompanying condensed consolidated statements of operations. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. Recently Issued Accounting Guidance Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. In July 2018, the FASB issued additional guidance which provided an additional transition method for adopting the updated guidance. Most prominent among the changes in the standard is the requirement for lessees to recognize ROU assets and lease liabilities for those leases that were classified as operating leases under previous U.S. GAAP. On January 1, 2019, we adopted Topic 842 by applying the non-comparative modified retrospective method of adoption. Under this method, financial information related to periods prior to adoption will be as originally reported under the then-current standard (Topic 840, Leases). Results for reporting periods beginning on or after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted, and continue to be reported in accordance with our historic accounting under Topic 840. We elected to apply the package of practical expedients to not reassess whether a contract is or contains a lease, lease classification, or initial lease costs for all leases that commenced before the adoption date. The adoption had a material impact to our condensed consolidated balance sheet. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. There was no other impact from the adoption. The adjustments to the opening balance sheet were as follows (in thousands):
See Note 11 for further disclosures related to Topic 842. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718), expanding the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this standard on January 1, 2019 and the adoption had no impact on our condensed consolidated financial statements. Effective the first quarter of 2020: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 includes an impairment model (known as the current expected credit loss model) on financial instruments and other commitments that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The use of forecasted information is intended to incorporate more timely information in the estimate of expected credit loss. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as credit quality. We are currently in the process of evaluating the impact of adoption of ASU 2016-13 on our investments, accounts and notes receivable, and contract assets. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendments apply to the disclosures of changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted, and an entity is also permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date. Adoption of this ASU is not expected to have a material impact on our consolidated financial statements. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
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Revenues |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Revenues Nature of Products and Services The following tables present our revenues by primary product and service offering (in thousands):
The following table presents our revenues disaggregated by geography (in thousands):
Contract Balances The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the three months ended June 30, 2019 (in thousands):
Contract liabilities (deferred revenue) consisted of the following (in thousands):
Remaining Performance Obligations As of June 30, 2019, we had approximately $1.05 billion of remaining performance obligations, which included both recognized contract liabilities as well as amounts that will be invoiced and recognized in future periods. The remaining performance obligations are limited only to arrangements that meet the definition of a contract under Topic 606 as of June 30, 2019. We expect to recognize between 15% - 20% of this balance over the next twelve months, and generally expect the remainder to be recognized over the following five to seven years, subject to risks related to delayed deployments, budget appropriation or other contract cancellation clauses.
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Cash, Cash Equivalents and Investments |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments The following tables summarize our cash, cash equivalents, and held-to-maturity investments at June 30, 2019 and December 31, 2018 (in thousands):
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Inventory |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted average cost of raw materials, which approximates the first-in, first-out (“FIFO”) method and includes allocations of manufacturing labor and overhead. Included in finished goods at June 30, 2019 and December 31, 2018 was $1.7 million and $1.4 million, respectively, of trial and evaluation hardware units. Provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. Inventory consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
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Goodwill and Intangible Assets |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The changes in the carrying amount of goodwill for the six months ended June 30, 2019 were as follows (in thousands):
Intangible assets (other than goodwill) consisted of the following (in thousands):
Amortization expense of intangible assets for the three and six months ended June 30, 2019 was $0.9 million and $1.9 million, respectively. Amortization expense of intangible assets for the three and six months ended June 30, 2018 was $1.7 million and $3.0 million, respectively. Estimated amortization for intangible assets with definite lives for the remaining six months of 2019, the next five years ended December 31, and thereafter, is as follows (in thousands):
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Other Assets |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets Other assets consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
(1) Represents the incremental costs of obtaining contracts with customers, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contracts and amortized consistent with the recognition timing of the revenue for the underlying performance obligations.
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Accrued Liabilities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
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Income Taxes |
6 Months Ended |
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Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We file income tax returns for federal purposes and in many states, as well as in multiple foreign jurisdictions. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three to four years, following the tax year to which these filings relate. Our U.S. federal income tax return for fiscal year 2016 is currently under audit by the Internal Revenue Service. Deferred Tax Assets Net deferred income tax assets at June 30, 2019, primarily include R&D tax credits, stock-based compensation expense, deferred revenue, accruals and reserves, and net operating losses, partially offset by accelerated depreciation expense and valuation allowance reserve. Our total net deferred tax assets at June 30, 2019 were $20.7 million. In preparing our condensed consolidated financial statements, management assesses the likelihood that its deferred tax assets will be realized from future taxable income. In evaluating our ability to recover our deferred income tax assets, management considers all available positive and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction by jurisdiction basis. A valuation allowance is established if it is determined that it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Management exercises significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets. As of June 30, 2019, we continue to demonstrate three-year cumulative pre-tax income in the U.S. federal and state tax jurisdictions; however, we have Arizona R&D Tax Credits expiring unutilized each year. Therefore, management has concluded that it is more likely than not that our Arizona R&D deferred tax asset will not be realized. As of June 30, 2019, we have cumulative pre-tax losses in Australia, the U.K., and Canada, which limits the ability to consider other subjective evidence, such as projections for future growth. On the basis of this evaluation, a full valuation allowance has been recorded for these jurisdictions. The amount of the deferred tax asset considered realizable; however, could be adjusted in future periods if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as projections for growth. We complete R&D tax credit studies for each year that an R&D tax credit is claimed for federal, Arizona, and California income tax purposes. Management has made the determination that it is more likely than not that the full benefit of the R&D tax credit will not be sustained on examination and recorded a liability for unrecognized tax benefits of $6.1 million as of June 30, 2019. In addition, management accrued $0.1 million for estimated uncertain tax positions related to certain federal income tax liabilities. Should the unrecognized benefit of $6.2 million be recognized, our effective tax rate would be favorably impacted. Approximately $2.9 million of the unrecognized tax benefit associated with R&D credits has been netted against the R&D deferred tax asset. Effective Tax Rate Our overall effective tax rate for the six months ended June 30, 2019, after discrete period adjustments, was (29.3)%. Before discrete adjustments, the tax rate was 21.4%, which is greater than the federal statutory rate, primarily due to state taxes and non-deductible expenses for items such as meals and entertainment, the executive compensation limitation under Internal Revenue Code ("IRC") Section 162(m), lobbying fees, and an income inclusion from global intangible low-taxed income ("GILTI"), offset by a reduction for foreign-derived intangible income ("FDII") and R&D tax credits. The effective tax rate was favorably impacted by a $3.3 million discrete tax benefit primarily associated with windfalls related to stock-based compensation for RSUs that vested or stock options that were exercised during the six months ended June 30, 2019. This was offset by an unfavorable discrete item of $0.6 million related to the write off of certain deferred tax assets related to future stock compensation vests for certain officers for whom deductibility of compensation is limited by IRC Section 162(m).
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Performance-based stock awards We have issued performance-based stock options and performance-based RSUs, the vesting of which is generally contingent upon the achievement of certain performance criteria related to our operating performance, as well as successful and timely development and market acceptance of future product introductions. In addition, certain of the performance RSUs have additional service requirements subsequent to the achievement of the performance criteria. Compensation expense is recognized over the requisite service period, which is defined as the longest explicit, implicit or derived service period based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. For awards containing multiple service, performance or market conditions, where all conditions must be satisfied prior to vesting, compensation expense is recognized over the requisite service period, which is defined as the longest explicit, implicit or derived service period, based on management’s estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. For both service-based and performance-based RSUs, we account for forfeitures as they occur as a reduction to stock-based compensation expense and additional paid-in-capital. For performance-based options with a vesting schedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense is recognized for each pair of performance and market conditions over the longer of the expected achievement period of the performance and market conditions, beginning at the point in time that the relevant performance condition is considered probable of achievement. The fair value of such awards is estimated on the grant date using Monte Carlo simulations. CEO Performance Award On May 24, 2018 (the “Grant Date”), our stockholders approved the Board of Directors’ grant of 6,365,856 stock option awards to Patrick W. Smith, our CEO (the “CEO Performance Award”). The CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational goals (performance conditions) and market capitalization goals (market conditions), assuming continued employment either as the CEO or as both Executive Chairman and Chief Product Officer and service through each vesting date. Each of the 12 vesting tranches of the CEO Performance Award have a 10-year contractual term and will vest upon certification by the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of the following eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA have been met for the previous four consecutive fiscal quarters. Adjusted EBITDA for purposes of the CEO Performance Award ("Adjusted EBITDA (CEO Performance Award)") is defined as net income (loss) attributable to common stockholders before interest expense, investment interest income, provision (benefit) for income taxes, depreciation and amortization, and stock-based compensation expense.
(1) In connection with the business acquisition that was completed during the three months ended June 30, 2018, the revenue goals have been adjusted for the acquiree's Target Revenue, as defined in the CEO Performance Award agreement. As of June 30, 2019, the following operational goals were considered probable of achievement:
The first two market capitalization goals have been achieved as of June 30, 2019. However, none of the stock options granted under the CEO Performance Award have vested thus far as the operational goals have not yet been achieved as of June 30, 2019. As there are two operational goals considered probable of achievement, we recorded stock-based compensation expense of $6.1 million related to the CEO Performance Award from the Grant Date through June 30, 2019. The number of stock options that would vest related to the two tranches is approximately 1.1 million shares. As of June 30, 2019, we had $39.1 million of total unrecognized stock-based compensation expense for the performance goals that were considered probable of achievement, which will be recognized over a weighted-average period of 7.2 years. As of June 30, 2019, we had unrecognized stock-based compensation expense of $200.7 million for the performance goals that were considered not probable of achievement. eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the 2019 Stock Incentive Plan (the “2019 Plan”), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our eXponential Stock Performance Plan (“XSPP”) and grants of eXponential Stock Units (“XSUs”) under the plan. Pursuant to the XSPP, all eligible full-time U.S. employees were granted an award of 60 XSUs in January 2019, and certain employees had the opportunity to elect to receive a percentage of the value of their target compensation over the next nine years (2019-2027) in the form of additional XSUs. For employees who elected to receive XSUs, the XSU grants were made as an up front, lump sum grant in January 2019, and are intended to replace that portion of the target compensation they elected to receive in the form of XSUs for the next nine years. Accordingly, their go forward target compensation will be reduced until 2027 by the amount of such compensation that the employees elected to receive in the form of the January 2019 XSU grants. A total of approximately 5.2 million XSUs were granted in the six months ended June 30, 2019. The XSUs are grants of restricted stock units, each with a term of approximately nine years, that vest in 12 equal tranches. Each of the 12 tranches will vest upon certification by the Compensation Committee of the Board of Directors that both (i) the market capitalization goal for such tranche, which begins at $2.5 billion for the first tranche and increases by increments of $1.0 billion thereafter, and (ii) any one of eight operational goals focused on revenue or eight operational goals focused on Adjusted EBITDA (CEO Performance Award) have been met for the previous four consecutive fiscal quarters. The XSPP contains an anti-dilution provision, which is used to calculate a maximum number of shares outstanding for purposes of determining achievement of the market capitalization goals whereby the maximum number of shares used to calculate the market capitalization goal is calculated by organically growing the current number of shares outstanding by 3% per year (the "XSU Maximum"). Any shares of Stock issued to Patrick W. Smith upon the exercise of the stock options granted to Mr. Smith under the CEO Performance Award shall increase the XSU Maximum. The XSU Maximum shall also be adjusted for acquisitions, spin-offs or other changes in the number of outstanding shares of common stock, if such changes have a corresponding adjustment on the market capitalization goals. The market capitalization and operational goals are identical to the CEO Performance Award, except for the number of shares that are used to calculate the market capitalization goals if shares outstanding exceed the XSU Maximum. Additionally, because the grant date is different than that of the CEO Performance Award, the measurement period for market capitalization is not identical. Stock-based compensation expense associated with XSU awards is recognized over the longer of the expected achievement period for each pair of market capitalization and operational goals, beginning at the point in time when the relevant operational goal is considered probable of being met. The market capitalization goal period and the valuation of each tranche are determined using a Monte Carlo simulation which is also is used as the basis for determining the expected achievement period of the market capitalization goal. The probability of meeting an operational goal and the expected achievement point in time for meeting a probable operational goal are based on a subjective assessment of our forward-looking financial projections, taking into consideration statistical analysis. Even though no tranches of the XSU awards vest unless a market capitalization and a matching operational goal are both achieved, stock-based compensation expense is recognized when an operational goal is considered probable of achievement regardless of whether a market capitalization goal is actually achieved. The first market capitalization goal has been achieved as of June 30, 2019. The second market capitalization goal was achieved on July 16, 2019. However, none of the XSU tranches have vested thus far as the operational goals have not yet been achieved as of June 30, 2019. As there are two operational goals considered probable of achievement, we recorded stock-based compensation expense of $1.9 million related to the XSU awards from their respective grant dates through June 30, 2019. The number of XSU awards that would vest related to the two tranches is approximately 0.9 million shares. As of June 30, 2019, we had $35.5 million of total unrecognized stock-based compensation expense for the performance goals that were considered probable of achievement, which will be recognized over a weighted-average period of 7.2 years. As of June 30, 2019, we had unrecognized stock-based compensation expense of $136.5 million for the performance goals that were considered not probable of achievement. Given the complexity of the awards, we utilized Monte Carlo simulations to simulate a range of possible future market capitalizations for the Company over the term of the awards. The average of all iterations of the simulation was used as the basis for the valuation and market capitalization goal derived service period for each tranche. Additionally, we applied an illiquidity discount of between 10.0% and 16.8% to the valuation of XSUs because the awards specify a post-vest holding period of 2.5 years. Certain of the XSU awards specify a post-vest holding period of the longer of 2.5 years or until the next tranche vests. The illiquidity discounts were estimated using the Finnerty model and reduced by the impact of expected payroll and income taxes due upon vesting of the awards, as the related proportion of shares are expected to be sold to satisfy such obligations. We measured the grant date fair value of the XSU awards with the following assumptions: risk-free interest rate of between 2.47% and 2.62%, expected term of approximately 9 years, expected volatility of between 44.96% and 45.47%, and dividend yield of 0.00%. Restricted Stock Units The following table summarizes RSU activity for the six months ended June 30, 2019 (number of units and aggregate intrinsic value in thousands):
Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $64.21 per share, multiplied by the number of RSUs outstanding. As of June 30, 2019, there was $79.5 million in unrecognized compensation costs related to RSUs under our stock plans for shares that are expected to vest. We expect to recognize the cost related to the RSUs over a weighted average period of 4.49 years. RSUs are released when vesting requirements are met. During the six months ended June 30, 2019, we granted 5.7 million RSUs, consisting of 0.4 million service-based RSUs and approximately 5.3 million performance-based RSUs, including 5.2 million XSUs. As of June 30, 2019, the performance criteria had been met for approximately four thousand of the 5.6 million performance-based RSUs outstanding. Certain of the performance-based RSUs outstanding as of June 30, 2019 can vest with a range of shares earned being between 0% and 200% of the targeted shares granted, depending on the final achievement of pre-determined performance criteria as of the vesting date. The amount of RSUs included in the table above related to such grants is the target level. The maximum additional number of performance-based RSUs that could be earned is 0.3 million, which are not included in the table above. Certain RSUs that vested in the six months ended June 30, 2019 were net-share settled such that we withheld shares to cover the employees’ tax obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to RSUs were approximately 29 thousand and had a value of $2.1 million on their respective vesting dates as determined by the closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the condensed consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital. Stock Option Activity The following table summarizes stock option activity for the six months ended June 30, 2019 (number of units and aggregate intrinsic value in thousands):
Aggregate intrinsic value represents the difference between the exercise price of the underlying stock option awards and the closing market price of our common stock of $64.21 on June 28, 2019. The intrinsic value of options exercised for the six months ended June 30, 2019 and 2018 was $1.1 million and $18.8 million, respectively. As of June 30, 2019, total options outstanding included 6.4 million unvested performance-based stock options. Of this total, 1.1 million options relate to tranches of the CEO Performance Award considered probable of achievement. Stock-based Compensation Expense The following table summarizes the composition of stock-based compensation expense for the three and six months ended June 30, 2019 and 2018 (in thousands):
Stock Incentive Plan In February 2019, our shareholders approved the 2019 Plan authorizing an additional 6.0 million shares, plus remaining available shares under prior plans, for issuance under the new plan. Combined with the legacy stock incentive plans, there are 2.1 million shares available for grant as of June 30, 2019. Stock Repurchase Plan In February 2016, our Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of our outstanding common stock subject to stock market conditions and corporate considerations. During the six months ended June 30, 2019 and 2018, no common shares were purchased under the program. As of June 30, 2019, $16.3 million remains available under the plan for future purchases. Any future purchases will be discretionary.
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Line of Credit |
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Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Line of Credit | Line of Credit We have a $50.0 million unsecured revolving line of credit with a domestic bank, of which $10.0 million is available for letters of credit. The credit agreement matures on December 31, 2021 and has an accordion feature which allows for an increase in the total line of credit up to $100.0 million, subject to certain conditions, including the availability of additional bank commitments. At June 30, 2019 and December 31, 2018, there were no borrowings under the line. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit. As of June 30, 2019, we had letters of credit outstanding of approximately $4.4 million under the facility and available borrowing of $45.6 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at LIBOR plus 1.0 to 1.5% per year determined in accordance with a pricing grid based on our funded debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio. We are required to comply with a maximum funded debt to EBITDA ratio of no greater than 2.50 to 1.00 based upon a trailing four fiscal quarter period. At June 30, 2019, our funded debt to EBITDA ratio was 0.001 to 1.00.
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Leases |
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Leases | Leases Lease Obligations We determine if an arrangement is a lease at inception. Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Additionally, we use the portfolio approach in determining the discount rate used to present value lease payments. We give consideration to our line of credit as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. The ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. We have operating and finance leases for office space and certain equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning on or after January 1, 2019, we account for lease components separately from non-lease components for all asset classes. Our leases have remaining terms of less than 1 to 4 years, some of which include one or more options to renew for up to 2 years, and some of which include options to terminate the leases within 1 year. The exercise of lease renewal options is at our sole discretion and such options are included in ROU assets and liabilities for renewal periods that are reasonably certain of exercise. Certain of our lease agreements include stated rental payment escalations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We sublease certain real estate to third parties. Finance leases as of June 30, 2019 were immaterial.
The components of lease expense were as follows (in thousands):
(1) Includes short-term leases, which are immaterial. (2) An immaterial portion of operating lease expense is included within research and development expenses and cost of sales. Other information related to leases was as follows (in thousands, except lease term and discount rate):
Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows (in thousands):
As of June 30, 2019, we do not have any leases that have not yet commenced other than the land lease purchase agreement described in Note 12. Disclosures related to periods prior to adoption of Topic 842 Rent expense under all operating leases, including both cancelable and non-cancelable leases, was $4.2 million and $2.9 million for the years ended December 31, 2018 and 2017, respectively. Future minimum lease payments under non-cancelable leases at December 31, 2018, were as follows (in thousands):
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Leases | Leases Lease Obligations We determine if an arrangement is a lease at inception. Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Additionally, we use the portfolio approach in determining the discount rate used to present value lease payments. We give consideration to our line of credit as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates. The ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives. We have operating and finance leases for office space and certain equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning on or after January 1, 2019, we account for lease components separately from non-lease components for all asset classes. Our leases have remaining terms of less than 1 to 4 years, some of which include one or more options to renew for up to 2 years, and some of which include options to terminate the leases within 1 year. The exercise of lease renewal options is at our sole discretion and such options are included in ROU assets and liabilities for renewal periods that are reasonably certain of exercise. Certain of our lease agreements include stated rental payment escalations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We sublease certain real estate to third parties. Finance leases as of June 30, 2019 were immaterial.
The components of lease expense were as follows (in thousands):
(1) Includes short-term leases, which are immaterial. (2) An immaterial portion of operating lease expense is included within research and development expenses and cost of sales. Other information related to leases was as follows (in thousands, except lease term and discount rate):
Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows (in thousands):
As of June 30, 2019, we do not have any leases that have not yet commenced other than the land lease purchase agreement described in Note 12. Disclosures related to periods prior to adoption of Topic 842 Rent expense under all operating leases, including both cancelable and non-cancelable leases, was $4.2 million and $2.9 million for the years ended December 31, 2018 and 2017, respectively. Future minimum lease payments under non-cancelable leases at December 31, 2018, were as follows (in thousands):
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Land Lease Purchase Agreement On December 13, 2018, we entered into a Purchase and Sale Agreement ("PSA") to purchase a leasehold interest to a parcel of land located in Maricopa County, Arizona for a period of 84 years, on which we intend to construct our new headquarters. The purchase price of the land lease was $13.1 million. It is also contemplated that we will prepay the rent under the lease in the amount of $10.9 million. The PSA includes a due diligence period, during which we may terminate and forfeit our initial deposit of $0.2 million. On March 4, 2019, we entered into an amendment to the PSA which extended the due diligence period to May 3, 2019. On May 3, 2019, we entered into a second amendment to the PSA which extended the due diligence period to June 28, 2019. The second amendment also revised certain stated approval dates and removed the requirement for an additional deposit originally due at the end of the due diligence period. The land lease remains contingent upon approval by the Salt River Pima-Maricopa Indian Community. Data Storage Purchase Commitment In June 2019, we entered into a purchase agreement for cloud data storage with a three years term beginning July 1, 2019. The purchase agreement includes a total commitment of $50.0 million, with an up-front prepayment of $15.0 million in July 2019. Product Litigation We are currently named as a defendant in seven lawsuits in which the plaintiffs allege either wrongful death or personal injury in situations in which a TASER CEW was used by law enforcement officers in connection with arrests. While the facts vary from case to case, these product liability claims typically allege defective product design, manufacturing, and/or failure to warn. They seek compensatory and sometimes punitive damages, often in unspecified amounts. We continue to aggressively defend all product litigation. As a general rule, it is our policy not to settle suspect injury or death cases. Exceptions are sometimes made where the settlement is strategically beneficial to us. Due to the confidential nature of our litigation strategy and the confidentiality agreements that are executed in the event of a settlement, we do not identify or comment on specific settlements by case or amount. Based on current information, we do not believe that the outcome of any such legal proceeding will have a material effect on our financial position, results of operations, or cash flows. We are self-insured for the first $5.0 million of any product claim made after 2014. No judgment or settlement has ever exceeded this amount in any products case. We continue to maintain product liability insurance coverage, including an insurance policy fronting arrangement, above our self-insured retention with various limits depending on the policy period. Other Litigation We are a defendant in a litigation matter filed by Digital Ally Inc. (“Digital”) in the District of Kansas alleging patent infringement regarding our Axon Signal technology. Axon was granted summary judgment of non-infringement on June 17, 2019 and judgment was entered in our favor on all of Digital's claims. Digital has appealed the ruling. We are also a defendant in a consumer class action lawsuit previously filed and dismissed in California in 2018 and now refiled in the District of Nevada on April 9, 2019 (Case No. 3:1-cv-00192) by consumer weapon purchaser Douglas Richey (“Richey”). The case alleges the TASER Pulse, X2 and X26P CEWs have a faulty safety switch based on Richey’s Pulse allegedly discharging inside its neoprene case in a jacket pocket without injury. Any such discharge was likely due to static electricity, as disclosed in our consumer warnings. We will vigorously defend this claim and the propriety of any class certification. Our motion to dismiss is pending. U.S. Federal Trade Commission Investigation In June 2018 we received a letter from the U.S. Federal Trade Commission (“FTC”) with respect to its non-public investigation into our acquisition of VIEVU, LLC in May 2018. The FTC issued a subpoena for certain information and documentation relating to the acquisition on March 21, 2019. We are cooperating with the investigation. General From time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. It is our policy to not disclose the specifics of any claim or threatened lawsuit until the summons and complaint are actually served on us. After carefully assessing the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed reasonably possible but not probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim, if material for disclosure. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing, the availability of insurance, and the severity of any potential loss. We reevaluate and update accruals as matters progress over time. Based on our assessment of outstanding litigation and claims as of June 30, 2019, we have determined that it is not reasonably possible that these lawsuits will individually, or in the aggregate, materially affect our results of operations, financial condition or cash flows. However, the outcome of any litigation is inherently uncertain and there can be no assurance that any expense, liability or damages that may ultimately result from the resolution of these matters will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage and will not have a material adverse effect on our operating results, financial condition or cash flows. Off-Balance Sheet Arrangements Under certain circumstances, we use letters of credit and surety bonds to guarantee our performance under various contracts, principally in connection with the installation and integration of Axon cameras and related technologies. Certain of our letters of credit and surety bonds have stated expiration dates with others being released as the contractual performance terms are completed. At June 30, 2019, we had outstanding letters of credit of $4.4 million that are expected to expire in May 2020 and September 2021. Additionally, we had $24.6 million of outstanding surety bonds at June 30, 2019, with $0.4 million expiring in 2019, $0.7 million expiring in 2020, $2.3 million expiring in 2021, $3.2 million expiring in 2022, $7.5 million expiring in 2023 and the remaining $10.5 million expiring in 2024.
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Related Party Transactions |
6 Months Ended |
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Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We subscribe to various cloud-based applications from Salesforce. Bret Taylor, who was a member of our Board of Directors through June 14, 2019, serves as President and Chief Product Officer of Salesforce. We incur costs at different times throughout the year, typically in advance of services being provided, and subsequently amortize these costs ratably to expense as services are provided over the contractual term. The cost to subscribe to various cloud-based hosting arrangements from Salesforce was $0.5 million and $0.4 million for the three months ended June 30, 2019 and 2018, respectively, and $1.0 million and $0.9 million for the six months ended June 30, 2019 and 2018, respectively. There were no amounts due to Salesforce as of June 30, 2019. Amounts due to Salesforce as of December 31, 2018 were negligible.
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Employee Benefit Plans |
6 Months Ended |
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Jun. 30, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans We have a defined contribution 401(k) plan for eligible employees, which is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. Employees are entitled to make tax-deferred contributions of up to the maximum amount allowed by law of their eligible compensation. We also have a non-qualified deferred compensation plan for certain executives, employees and non-employee directors through which participants may elect to postpone the receipt and taxation of a portion of their compensation, including stock-based compensation, received from us. The non-qualified deferred compensation plan allows eligible participants to defer up to 80% of their base salary and up to 100% of other types of compensation. The plan also allows for matching and discretionary employer contributions. Employee deferrals are deemed 100% vested upon contribution. Distributions from the plan are made upon retirement, death, separation of service, specified date or upon the occurrence of an unforeseeable emergency. Distributions can be paid in a variety of forms from lump sum to installments over a period of years. Participants in the plan are entitled to select from a wide variety of investments available under the plan and are allocated gains or losses based upon the performance of the investments selected by the participant. All gains or losses are allocated fully to plan participants and we do not guarantee a rate of return on deferred balances. Assets related to this plan consist of corporate-owned life insurance contracts and are included in other assets in the condensed consolidated balance sheets; see Note 6 for balances. Participants have no rights or claims with respect to any plan assets and any such assets are subject to the claims of our general creditors. Contributions to the plans are made by both the employee and us. Our contributions to the 401(k) plan are based on the level of employee contributions and are immediately vested. Our matching contributions to the 401(k) and non-qualified deferred compensation plans were $1.1 million and $0.8 million for the three months ended June 30, 2019 and 2018, respectively, and $2.5 million and $1.6 million for the six months ended June 30, 2019 and 2018, respectively. Future matching contributions to the plans are at our sole discretion.
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Segment Data |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Data | Segment Data Our operations are comprised of two reportable segments: the manufacture and sale of CEWs, batteries, accessories, extended warranties and other products and services (the “TASER” segment); and the software and sensors business, which includes the sale of devices, wearables, applications, cloud and mobile products (collectively, the “Software and Sensors” segment). Our Chief Executive Officer, who is the CODM, is not provided asset information or sales, general, and administrative expense by segment. Information relative to our reportable segments was as follows (in thousands):
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Organization and Summary of Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2018, as filed on Form 10-K, with the exception of our adoption of certain accounting pronouncements which we describe below. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2018. The results of operations for the six months ended June 30, 2019 and 2018 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include:
Actual results could differ materially from those estimates.
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Use of Estimates | Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2018, as filed on Form 10-K, with the exception of our adoption of certain accounting pronouncements which we describe below. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2018. The results of operations for the six months ended June 30, 2019 and 2018 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include:
Actual results could differ materially from those estimates.
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Segment Information | Segment Information Our operations are comprised of two reportable segments: the manufacture and sale of conducted electrical weapons ("CEWs"), batteries, accessories, extended warranties and other products and services (the “TASER” segment); and the development, manufacture, and sale of software and sensors, which includes the sale of devices, wearables, applications, cloud and mobile products (collectively, the “Software and Sensors” segment). Revenue from our “products” in the Software and Sensors segment are generally from sales of sensors, including on-officer body cameras, Axon Fleet cameras, other hardware sensors, warranties on sensors, and other products, and is sometimes referred to as "Sensors and Other revenue." Revenue from our “services” in the Software and Sensors segment comprise sales related to the Axon Cloud, which includes Axon Evidence, cloud-based evidence management software revenue, other recurring cloud-hosted software revenue and related professional services, and is sometimes referred to as "Axon Cloud revenue." Within the Software and Sensors segment, we include only revenues and costs attributable to that segment, which costs include: costs of sales for both products and services, direct labor, product management and research and development ("R&D") for products included, or to be included, within the Software and Sensors segment. All other costs are included in the TASER segment. Our Chief Executive Officer, who is the Chief Operating Decision Maker (the “CODM”), is not provided asset information or sales, general, and administrative expense by segment. Reportable segments are determined based on discrete financial information reviewed by the CODM. We organize and review operations based on products and services. We perform an analysis of our reportable segments on at least an annual basis. Additional information related to our business segments is summarized in Note 15.
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Geographic Information and Major Customers | Geographic Information and Major Customers / Suppliers For the three and six months ended June 30, 2019 and 2018, no individual country outside the U.S. represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three and six months ended June 30, 2019 and 2018, no customer represented more than 10% of total net sales. At June 30, 2019 and December 31, 2018, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the U.S., Mexico, China, Taiwan, Vietnam, Canada, Germany and Israel. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases without incurring significant production delays. We also strategically hold safety stock levels on custom components to further reduce this risk. For off the shelf components, we believe that in most cases there are readily available alternative suppliers who can consistently meet our needs for these components. We acquire most of our components on a purchase order basis and do not have any significant long-term contracts with component suppliers.
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Income per Common Share | Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Potentially dilutive securities include outstanding stock options and unvested restricted stock units ("RSUs"). The dilutive effect of potentially dilutive securities is reflected in diluted earnings per share by application of the treasury stock method. Under the treasury stock method, an increase in the fair market value of our common stock can result in a greater dilutive effect from potentially dilutive securities.
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Standard Warranties | Standard Warranties We warranty our CEWs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will repair or replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated based on historical data related to warranty claims on a quarterly basis and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying condensed consolidated balance sheets.
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Fair Value of Financial Instruments | Fair Value Measurements and Financial Instruments The fair value framework prioritizes the inputs to valuation techniques for measuring financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
We have cash equivalents and investments, which at June 30, 2019 and December 31, 2018 were comprised of money market funds and, at June 30, 2019, also included corporate bonds. See additional disclosure regarding the fair value of our cash equivalents and investments in Note 3. Included in the balance of other assets as of June 30, 2019 and December 31, 2018 was $4.0 million and $3.6 million, respectively, related to corporate-owned life insurance policies which are used to fund our deferred compensation plan. We determine the fair value of insurance contracts by obtaining the cash surrender value of the contracts from the issuer, a Level 2 valuation technique. Our financial instruments also include accounts and notes receivable, contract assets, accounts payable and accrued liabilities. As these instruments are generally short-term in nature, their carrying values approximate their fair values on the accompanying condensed consolidated balance sheets.
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Valuation of Goodwill, Intangibles and Long-lived Assets | Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such circumstances could include, but are not limited to, a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. During the three months ended June 30, 2019, we abandoned certain capitalized software related to implementation work on an enterprise resource planning system conversion, resulting in an impairment charge of $1.3 million, which was included in sales, general and administrative expense in the accompanying condensed consolidated statements of operations. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year.
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Recently Issued Accounting Guidance | Recently Issued Accounting Guidance Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities on the balance sheet. In July 2018, the FASB issued additional guidance which provided an additional transition method for adopting the updated guidance. Most prominent among the changes in the standard is the requirement for lessees to recognize ROU assets and lease liabilities for those leases that were classified as operating leases under previous U.S. GAAP. On January 1, 2019, we adopted Topic 842 by applying the non-comparative modified retrospective method of adoption. Under this method, financial information related to periods prior to adoption will be as originally reported under the then-current standard (Topic 840, Leases). Results for reporting periods beginning on or after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted, and continue to be reported in accordance with our historic accounting under Topic 840. We elected to apply the package of practical expedients to not reassess whether a contract is or contains a lease, lease classification, or initial lease costs for all leases that commenced before the adoption date. The adoption had a material impact to our condensed consolidated balance sheet. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. There was no other impact from the adoption. The adjustments to the opening balance sheet were as follows (in thousands):
See Note 11 for further disclosures related to Topic 842. In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718), expanding the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. We adopted this standard on January 1, 2019 and the adoption had no impact on our condensed consolidated financial statements. Effective the first quarter of 2020: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 includes an impairment model (known as the current expected credit loss model) on financial instruments and other commitments that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The use of forecasted information is intended to incorporate more timely information in the estimate of expected credit loss. This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as credit quality. We are currently in the process of evaluating the impact of adoption of ASU 2016-13 on our investments, accounts and notes receivable, and contract assets. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendments apply to the disclosures of changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted, and an entity is also permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date. Adoption of this ASU is not expected to have a material impact on our consolidated financial statements.
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Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
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Organization and Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Number of Shares Outstanding and Income Per Share | The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data):
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Summary of Changes in Estimated Product Warranty Liabilities | Changes in our estimated product warranty liabilities were as follows (in thousands):
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Adjustments to Opening Balance Sheet | The adjustments to the opening balance sheet were as follows (in thousands):
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Revenues (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue by Product and Service Offering and Geography | The following tables present our revenues by primary product and service offering (in thousands):
The following table presents our revenues disaggregated by geography (in thousands):
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Contract with Customer, Assets and Liabilities | The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the three months ended June 30, 2019 (in thousands):
Contract liabilities (deferred revenue) consisted of the following (in thousands):
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Cash, Cash Equivalents and Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash, Cash Equivalents and Held-to-Maturity Investments by Type | The following tables summarize our cash, cash equivalents, and held-to-maturity investments at June 30, 2019 and December 31, 2018 (in thousands):
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Inventory (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
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Goodwill and Intangible Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The changes in the carrying amount of goodwill for the six months ended June 30, 2019 were as follows (in thousands):
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Indefinite-Lived Intangible Assets Other than Goodwill | Intangible assets (other than goodwill) consisted of the following (in thousands):
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Finite-Lived Intangible Assets Other than Goodwill | Intangible assets (other than goodwill) consisted of the following (in thousands):
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Estimated Amortization Expense of Intangible Assets | Estimated amortization for intangible assets with definite lives for the remaining six months of 2019, the next five years ended December 31, and thereafter, is as follows (in thousands):
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Other Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | Other assets consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
(1) Represents the incremental costs of obtaining contracts with customers, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contracts and amortized consistent with the recognition timing of the revenue for the underlying performance obligations.
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Accrued Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | Accrued liabilities consisted of the following at June 30, 2019 and December 31, 2018 (in thousands):
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Stockholders' Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Compensation Goals |
(1) In connection with the business acquisition that was completed during the three months ended June 30, 2018, the revenue goals have been adjusted for the acquiree's Target Revenue, as defined in the CEO Performance Award agreement.
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Summary of Restricted Stock Unit Activity | The following table summarizes RSU activity for the six months ended June 30, 2019 (number of units and aggregate intrinsic value in thousands):
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Summary of the Stock Option Activity | The following table summarizes stock option activity for the six months ended June 30, 2019 (number of units and aggregate intrinsic value in thousands):
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Stock-Based Compensation | The following table summarizes the composition of stock-based compensation expense for the three and six months ended June 30, 2019 and 2018 (in thousands):
|
Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Disclosures |
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Components of Lease Expense | The components of lease expense were as follows (in thousands):
(1) Includes short-term leases, which are immaterial. (2) An immaterial portion of operating lease expense is included within research and development expenses and cost of sales. Other information related to leases was as follows (in thousands, except lease term and discount rate):
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Schedule of Future Minimum Rental Payments For Operating Leases | Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows (in thousands):
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Lessor, Operating Lease, Payments to be Received, Maturity | Future minimum lease payments under non-cancellable leases as of June 30, 2019 were as follows (in thousands):
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Schedule of Future Minimum Lease Payments for Capital Leases | Future minimum lease payments under non-cancelable leases at December 31, 2018, were as follows (in thousands):
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Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum lease payments under non-cancelable leases at December 31, 2018, were as follows (in thousands):
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Segment Data (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operational Information Relative to the Company's Reportable Segments | Information relative to our reportable segments was as follows (in thousands):
|
Organization and Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2019
USD ($)
segment
|
Dec. 31, 2018
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of reportable segments | segment | 2 | ||
Warranty period | 1 year | ||
Corporate owned life insurance policies fair value | $ 4,018 | $ 4,018 | $ 3,596 |
Restricted cash balance | 660 | 660 | 661 |
Impairment charge | 1,300 | ||
Prepaid Expenses and Other Current Assets | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Restricted cash balance | 900 | 900 | 900 |
Other Current Assets | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Restricted cash balance | $ 700 | $ 700 | $ 700 |
Organization and Summary of Significant Accounting Policies - Weighted Average Number of Shares Outstanding and Income Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2019 |
Mar. 31, 2019 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Numerator for basic and diluted earnings per share: | ||||||
Net income | $ 738 | $ 6,419 | $ 8,485 | $ 12,926 | $ 7,157 | $ 21,411 |
Denominator: | ||||||
Weighted average shares outstanding—basic (in shares) | 59,187 | 55,527 | 59,051 | 54,330 | ||
Dilutive effect of stock-based awards (in shares) | 813 | 1,527 | 825 | 1,562 | ||
Diluted weighted average shares outstanding (in shares) | 60,000 | 57,054 | 59,876 | 55,892 | ||
Anti-dilutive stock-based awards excluded (in shares) | 12,056 | 3,023 | 12,111 | 1,533 | ||
Net income per common share: | ||||||
Basic (in dollars per share) | $ 0.01 | $ 0.15 | $ 0.12 | $ 0.39 | ||
Diluted (in dollars per share) | $ 0.01 | $ 0.15 | $ 0.12 | $ 0.38 |
Organization and Summary of Significant Accounting Policies - Summary of Changes in Estimated Product Warranty Liabilities (Detail) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||
Balance, beginning of period | $ 898 | $ 644 |
Utilization of accrual | (250) | (149) |
Warranty expense | 634 | 10 |
Balance, end of period | $ 1,282 | $ 505 |
Organization and Summary of Significant Accounting Policies Organization and Summary of Significant Accounting Policies - Adjustments to Opening Balance Sheet (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Assets | |||
Other assets | $ 35,594 | $ 35,482 | $ 22,999 |
Total assets | 746,370 | 732,023 | 719,540 |
Liabilities and Equity | |||
Accrued liabilities | 34,011 | 39,954 | 41,092 |
Other current liabilities | 3,852 | 3,625 | 37 |
Total current liabilities | 163,673 | 168,461 | 166,011 |
Other long-term liabilities | 11,967 | 15,737 | 5,704 |
Total liabilities | 257,443 | 264,699 | 252,216 |
Total liabilities and stockholders’ equity | $ 746,370 | 732,023 | $ 719,540 |
Accounting Standards Update 2016-02 | |||
Assets | |||
Other assets | 12,483 | ||
Total assets | 12,483 | ||
Liabilities and Equity | |||
Accrued liabilities | (1,138) | ||
Other current liabilities | 3,588 | ||
Total current liabilities | 2,450 | ||
Other long-term liabilities | 10,033 | ||
Total liabilities | 12,483 | ||
Total liabilities and stockholders’ equity | $ 12,483 |
Revenues - Contract Assets, Contract Liabilities (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
|
Revenue from Contract with Customer [Abstract] | ||
Contract assets, net | $ 26,908 | |
Contract liabilities (deferred revenue) | 187,937 | $ 181,433 |
Revenue recognized in the period from: | ||
Amounts included in contract liabilities at the beginning of the period | $ 58,302 |
Inventory (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Inventory, finished goods, trial and evaluation, gross | $ 1,700 | $ 1,400 |
Raw materials | 21,784 | 19,670 |
Finished goods | 19,215 | 14,093 |
Total inventory | $ 40,999 | $ 33,763 |
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Balance, beginning of period | $ 24,981 |
Foreign currency translation adjustment | (12) |
Balance, end of period | 24,969 |
TASER Weapons | |
Goodwill [Roll Forward] | |
Balance, beginning of period | 1,338 |
Foreign currency translation adjustment | (6) |
Balance, end of period | 1,332 |
Software and Sensors | |
Goodwill [Roll Forward] | |
Balance, beginning of period | 23,643 |
Foreign currency translation adjustment | (6) |
Balance, end of period | $ 23,637 |
Goodwill and Intangible Assets Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense of intangible assets | $ 0.9 | $ 1.7 | $ 1.9 | $ 3.0 |
Goodwill and Intangible assets - Estimated Amortization Expense of Intangible Assets (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2019 Remaining | $ 1,653 | |
2020 | 3,300 | |
2021 | 2,852 | |
2022 | 1,251 | |
2023 | 954 | |
2024 | 872 | |
Thereafter | 1,457 | |
Total | $ 12,339 | $ 14,077 |
Other Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Cash surrender value of corporate-owned life insurance policies | $ 4,018 | $ 3,596 | |
Deferred commissions | 16,597 | 15,530 | |
Restricted cash | 660 | 661 | |
Operating lease assets | 10,770 | ||
Prepaid expenses, deposits and other | 3,549 | 3,212 | |
Total other long-term assets | $ 35,594 | $ 35,482 | $ 22,999 |
Accrued Liabilities (Detail) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|---|
Payables and Accruals [Abstract] | |||||
Accrued salaries, benefits and bonus | $ 15,106 | $ 19,063 | |||
Accrued professional, consulting and lobbying fees | 4,688 | 4,894 | |||
Accrued warranty expense | 1,282 | 898 | $ 505 | $ 644 | |
Accrued income and other taxes | 3,448 | 4,167 | |||
Other accrued liabilities | 9,487 | 12,070 | |||
Accrued liabilities | $ 34,011 | $ 39,954 | $ 41,092 |
Income Taxes - Additional Information (Detail) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Tax Credit Carryforward [Line Items] | |
Deferred tax assets, net | $ 20.7 |
Unrecognized tax benefits | 6.2 |
Research and development tax credit studies | $ 2.9 |
Overall effective tax rate, after discrete period adjustments (as a percentage) | (29.30%) |
Effective tax rate, before discrete period adjustment (as a percentage) | 21.40% |
Write off of certain deferred tax assets | $ 0.6 |
Restricted Stock Units (RSUs) | |
Tax Credit Carryforward [Line Items] | |
Discrete tax benefit, stock-based compensation | 3.3 |
State Tax | |
Tax Credit Carryforward [Line Items] | |
Unrecognized tax benefits recognized during period | 6.1 |
Federal Income Tax | |
Tax Credit Carryforward [Line Items] | |
Unrecognized tax benefits recognized during period | $ 0.1 |
Stockholders' Equity - Stock Option Activity - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate intrinsic value price per share (in dollars per share) | $ 64.21 | ||
Total intrinsic value of options exercised | $ 1.1 | $ 18.8 | |
Number of options outstanding (in shares) | 6,433 | 6,458 | |
Performance Shares | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of options outstanding (in shares) | 6,400 | ||
Options related to tranches considered probable of achievement | 1,100 |
Stockholders' Equity - Reported Share-Based Compensation (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 8,627 | $ 4,954 | $ 16,532 | $ 9,047 |
Cost of products sold and services delivered | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 237 | 125 | 463 | 266 |
Sales, general and administrative expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 4,941 | 2,731 | 9,622 | 5,035 |
Research and development expenses | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 3,449 | $ 2,098 | $ 6,447 | $ 3,746 |
Stockholders' Equity - Stock Repurchase Plan - Additional Information (Detail) - USD ($) |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Feb. 01, 2019 |
Feb. 29, 2016 |
|
2019 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Additional authorized shares (in shares) | 2,100,000 | 6,000,000.0 | ||
2016 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Outstanding common stock repurchase program authorized amount (up to) | $ 50,000,000.0 | |||
Shares repurchased during period (in shares) | 0 | 0 | ||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 16,300,000 |
Leases Leases - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2019 |
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Lessee, Lease, Description [Line Items] | |||
Renewal term | 2 years | ||
Termination period | 1 year | ||
Rent expense | $ 4.2 | $ 2.9 | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining terms | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining terms | 4 years |
Leases Leases - Balance Sheet (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
ASSETS | |
Operating lease assets, other assets | $ 10,770 |
Current | |
Operating lease, current liabilities | 3,814 |
Noncurrent | |
Operating lease, noncurrent liabilites | 8,013 |
Total lease liabilities | $ 11,827 |
Leases Leases - Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Operating lease cost | $ 1,137 | $ 2,154 |
Sublease income | (95) | (137) |
Net lease expense | $ 1,042 | $ 2,017 |
Leases Leases - Supplemental Cash Flow and Balance Sheet Information (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Cash Flow, Lessee [Abstract] | |
Operating cash flows from operating leases | $ 2,017 |
Right-Of-Use Asset Obtained In Exchange For Lease Liability [Abstract] | |
Operating leases | $ 84 |
Weighted Average Remaining Lease Term [Abstract] | |
Operating leases (in years) | 3 years 6 months |
Leases, Weighted Average Discount Rate [Abstract] | |
Operating leases (as a percentage) | 3.60% |
Leases Leases - Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Operating Leases, After Adoption of 842 | ||
2019 Remaining | $ 2,248 | |
2020 | 4,224 | |
2021 | 3,340 | |
2022 | 2,409 | |
2023 | 1,173 | |
2024 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 13,394 | |
Sublease income, After Adoption of 842 | ||
2019 Remaining | (164) | |
2020 | (82) | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | (246) | |
Net, After Adoption of 842 | ||
2019 Remaining | 2,084 | |
2020 | 4,142 | |
2021 | 3,340 | |
2022 | 2,409 | |
2023 | 1,173 | |
2024 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 13,148 | |
Less: Amount representing interest | (1,321) | |
Present value of lease payments | $ 11,827 | |
Operating Leases, Before Adoption of 842 | ||
2019 | $ 3,670 | |
2020 | 3,572 | |
2021 | 2,961 | |
2022 | 2,001 | |
2023 | 573 | |
Thereafter | 0 | |
Total minimum lease payments | 12,777 | |
Capital Leases, Before Adoption of 842 | ||
2019 | 40 | |
2020 | 36 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 76 | |
Less: Amount representing interest | (6) | |
Capital lease obligation | $ 70 |
Related Party Transactions - Additional Information (Detail) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Related Party Transaction [Line Items] | ||||
Outstanding amount due to related parties | $ 0 | $ 0 | ||
Software Licensing and Subscription | Officer | ||||
Related Party Transaction [Line Items] | ||||
Quarterly payments | $ 500,000 | $ 400,000 | $ 1,000,000.0 | $ 900,000 |
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Defined Benefit Plan Disclosure [Line Items] | ||||
Employee deferrals deemed vested percentage upon contribution | 100.00% | |||
Defined contribution plan, cost | $ 1.1 | $ 0.8 | $ 2.5 | $ 1.6 |
Maximum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Deferral percentage of base salary (up to) | 80.00% | |||
Deferral percentage of other compensation (up to) | 100.00% |
Label | Element | Value |
---|---|---|
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 18,994,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | 2,470,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | 1,573,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 18,994,000 |
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