Xplore reveals colorful hyperspectral views captured by its planet-watching satellite
Bellevue, Wash.-based Xplore has released the first hyperspectral images from its XCUBE-1 satellite, six months after the shoebox-sized spacecraft was sent into orbit.
The pictures, captured with a resolution of 5 meters (16 feet) per pixel, show a river in Arizona, rugged terrain in Saudi Arabia, farmland in Uzbekistan and a settlement in Inner Mongolia. Each image is color-coded to reflect wavelengths that go beyond what the eye can see.
Such images can be used to assess agricultural crop health, moisture levels and other characteristics of a given terrain. Thermal infrared imagery could be used to track the spectral signatures of seagoing vessels or overland shipments as part of a campaign to crack down on illegal trafficking. For military applications, hyperspectral images could point to newly laid minefields or see through camouflage. And for space applications, Xplore's multi-sensor imaging system could be turned spaceward to track other satellites.
'Xplore is focused on providing high-quality data products for our customers and partners,' Jeff Rich, co-founder and CEO of Xplore, said today in a news release. 'Our imagery is outperforming expectations, and its exceptional quality stems from the sophisticated ground calibration of our instruments and data processing pipeline. We expect demand for high-quality hyperspectral imagery to expand rapidly in multiple domains.'
Hyperspectral satellite image of An Nabhaniyah, Saudi Arabia. ©2025 Xplore Inc. All rights reserved.
Hyperspectral satellite image of farmland in Uzbekistan. ©2025 Xplore Inc. All rights reserved.
Hyperspectral satellite image of Inner Mongolia, China. ©2025 Xplore Inc. All rights reserved.
Two years ago, Xplore won a study contract from the National Reconnaissance Office to look into potential applications for hyperspectral imaging. Last December, XCUBE-1 was launched into low Earth orbit on a SpaceX Falcon 9 rocket as part of the Bandwagon-2 satellite rideshare mission.
Xplore says it's sharing its initial data and exploring use cases with key customers and partners. The company plans to send future satellite platforms into Earth orbit and to other destinations to execute on its 'Space as a Service' business model.
'We're thrilled with Xplore's progress and are thankful for our talented team and partners,' Xplore co-founder and chief operating officer Lisa Rich said. 'Their hard work and dedication are clearly reflected in the outstanding imagery we're producing. We now invite customers to request data samples to assess our data for their programs and projects. The use of these data products will be crucial to produce insights, perform change detection and identify anomalies that are critical to our customers' applications.'
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Financial commentary by segment Software & ServicesTHREE MONTHS ENDEDCHANGE30 JUN 202531 MAR 202530 JUN 2024QoQYoY(in thousands) Revenue $ 292,178$ 262,737$ 210,47311.2 %38.8 % Gross margin 75.6 %74.2 %74.1 % 140 bp 150 bp Adjusted gross margin 78.9 %77.7 %76.6 % 120 bp 230 bp Software & Services revenue growth of 39% year over year was primarily driven by new users and expansion of existing customers adoption of premium software offerings. Software & Services gross margin of 75.6% increased from 74.1% year over year. Excluding the impact of stock-based compensation and intangibles amortization, Software & Services adjusted gross margin of 78.9% increased from 76.6% year over year, primarily driven by higher software mix. Connected DevicesTHREE MONTHS ENDEDCHANGE30 JUN 202531 MAR 202530 JUN 2024QoQYoY(in thousands) Revenue $ 376,360$ 340,896$ 292,76310.4 %28.6 % Gross margin 48.6 %50.1 %51.3 % (150) bp (270) bp Adjusted gross margin 51.1 %52.8 %53.4 % (170) bp (230) bp Connected Devices revenue growth of 29% year over year was primarily driven by strong demand for TASER 10 devices and associated cartridges, Axon Body 4 and growing demand for platform solutions. Connected Devices gross margin of 48.6% decreased from 51.3% year over year. Excluding the impact of stock-based compensation and intangibles amortization, Connected Devices adjusted gross margin of 51.1% decreased from 53.4% year over year, primarily driven by higher mix of platform solutions. Forward-Looking Operating Metrics30 JUN 202531 MAR 202531 DEC 202430 SEP 202430 JUN 2024 Annual recurring revenue ($ millions) (1) $ 1,183$ 1,104$ 1,001$ 885$ 850 Net revenue retention (1) 124 %123 %123 %123 %122 % Future contracted bookings ($ billions) (1) $ 10.7$ 9.9$ 10.1$ 8.2$ 7.5 ____________________________________________________________________ (1) Refer to "Statistical Definitions" below. Annual recurring revenue grew 39% year over year to $1.2 billion. Growth in annual recurring revenue is primarily driven by adoption of premium offerings and new users of our cloud products. Net revenue retention was 124% in the quarter, reflecting our ability to deliver additional value to our customers over time and de minimis attrition. We drive adoption of our cloud software solutions through integrated subscription plans, which include a variety of premium software options. 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Accordingly, we do not provide a reconciliation of projected net income to projected Adjusted EBITDA. We expect stock-based compensation expenses to be approximately $580 million to $630 million, consistent with prior guidance. Full year stock-based compensation expense includes approximately $330 million, related to the broad-based 2024 eXponential Stock Plan and the 2024 CEO Performance Award, primarily in SG&A and R&D. These performance-based incentive programs are achieved through stock price, operational and time-based requirements and are divided into seven substantially equal tranches. We expect 2025 CapEx to be in the range of $170 million to $185 million. Our 2025 CapEx plans include long-term R&D investment projects, continued capacity expansion, global facility build-outs and new product development costs. Expected capital expenditures do not include costs related to investments in a new headquarters, as we now await local zoning and planning decisions. We expect to have a better update next quarter on when we will be able to break ground on the project. Quarterly conference call and webcastWe will host our Q2 2025 earnings conference call webinar on Monday, August 4 at 2 p.m. PT / 5 p.m. ET The webcast will be available via a link on Axon's investor relations website at or can be accessed directly via Statistical DefinitionsAnnual recurring revenue: Annual recurring revenue is a performance indicator that management believes provides more visibility into the growth of our revenue generated by our highest margin, recurring services. Annual recurring revenue should be viewed independently of revenue and deferred revenue because it is an operating measure and is not intended to be combined with or to replace GAAP revenue or deferred revenue, as they can be impacted by contract start and end dates and renewal rates. Annual recurring revenue is not intended to be a replacement or forecast of revenue or deferred revenue. We calculate annual recurring revenue as monthly recurring license, integration, warranty and storage revenue, annualized. Net revenue retention: Dollar-based net revenue retention is an important metric to measure our ability to retain and expand our relationships with existing customers. We calculate it as the software, camera and TASER warranty subscription and support revenue from a base set of agency customers from which we generated Axon Cloud subscription and warranty revenue in the last month of a quarter divided by the software and camera warranty subscription and support revenue from the year-ago month of that same customer base. This calculation includes high-margin warranty revenue but purposely excludes the lower-margin hardware subscription component of the customer contracts, as it is meant to be a SaaS metric that we use to monitor the health of the recurring revenue business we are building. This calculation also excludes the implied monthly revenue contribution of customers that were added since the year-ago quarter, and therefore excludes the benefit of new customer acquisition. The metric includes customers, if any, that terminated during the annual period, and therefore, this metric is inclusive of customer churn. This metric is downwardly adjusted to account for the effect of phased deployments—meaning that, for the year-ago period, we consider the total contractually obligated implied monthly revenue amount, rather than monthly revenue amounts that might have been in actuality smaller on a GAAP basis due to the customer not having yet fully deployed their Axon solution. For more information relative to our revenue recognition policies, please reference our filings with the Securities and Exchange Commission (SEC). Future contracted bookings: This operational metric tracks our total unrecognized contracted bookings, including remaining performance obligations, in addition to contracts with certain termination or other clauses as a result of which they are not otherwise included in remaining performance obligations. Total future contracted bookings for products and services represent total orders that the company has received and not yet performed. We define future contracted bookings as cumulative bookings, net of cancellations, less product and service revenue recognized to date. This operational metric is subject to change based on future events, including terminations for convenience, the execution of optional periods or other contract cancellations. To the extent future contract bookings become recognized as revenue, it is recognized over a period of multiple years. Further, this operational metric may be unique to the Company, as it may be different from similarly titled operational metrics used by other companies. As such, the presentation of this operational metric may not enhance the comparability of the Company's results to the results of other companies. Supplementary Non-GAAP MeasuresTo supplement the Company's financial results presented in accordance with GAAP, we present the non-GAAP financial measures of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Margin, Non-GAAP Net Income, Non-GAAP Diluted Earnings Per Share, Free Cash Flow and Adjusted Free Cash Flow. The Company's management uses these non-GAAP financial measures in evaluating the Company's performance in comparison to prior periods. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance, and when planning and forecasting our future periods. A reconciliation of GAAP to the non-GAAP financial measures is presented below. EBITDA (most comparable GAAP measure: net income) – Earnings before interest expense, investment interest income, income taxes, depreciation and amortization. Adjusted EBITDA (most comparable GAAP measure: net income) – Earnings before interest expense; investment interest income; income taxes; depreciation; amortization; noncash stock-based compensation expense; fair value adjustments related to strategic investments, marketable securities, and mark-to-market on our non-qualified deferred compensation liabilities; debt inducement expense associated with the early repurchase of a portion of our 2027 Notes; transaction and integration costs related to strategic investments and acquisitions, including the change in fair value of contingent consideration arrangements; inventory step-up amortization related to acquisitions; certain litigation costs and recoveries related to (1) antitrust cases we consider to be non-recurring and outside of our core operating results and (2) litigation matters for acquired companies that were unresolved at the date of the acquisition; payroll taxes related to 2024 Employee XSP vesting; and other unusual, non-recurring pre-tax items that are not considered representative of our underlying operating performance. Adjusted EBITDA margin (most comparable GAAP measure: net income margin) – Adjusted EBITDA as a percentage of net sales. Adjusted gross margin (most comparable GAAP measure: gross margin) – Gross margin before noncash stock-based compensation expense, amortization of acquired intangible assets, inventory step-up amortization related to acquisitions, and payroll taxes related to 2024 Employee XSP vesting. Non-GAAP net income (most comparable GAAP measure: net income) – Net income excluding the costs of noncash stock-based compensation expense; fair value adjustments related to strategic investments and marketable securities; debt inducement expense associated with the early repurchase of a portion of our 2027 Notes; transaction and integration costs related to strategic investments and acquisitions, including the change in fair value of contingent consideration arrangements; inventory step-up amortization related to acquisitions; certain litigation costs and recoveries related to (1) antitrust cases we consider to be non-recurring and outside of our core operating results and (2) litigation matters for acquired companies that were unresolved at the date of the acquisition; payroll taxes related to 2024 Employee XSP vesting; and other unusual, non-recurring pre-tax items that are not considered representative of our underlying operating performance. The Company tax-effects non-GAAP adjustments using the blended statutory federal and state tax rates for each period presented. Non-GAAP diluted earnings per share (most comparable GAAP measure: earnings per share) – Measure of Company's non-GAAP net income divided by the weighted average number of diluted common shares outstanding during the period presented. Free cash flow (most comparable GAAP measure: cash flow from operating activities) – Cash flows provided by operating activities minus purchases of property and equipment and intangible assets. Adjusted free cash flow (most comparable GAAP measure: cash flow from operating activities) – Cash flows provided by operating activities minus purchases of property and equipment and intangible assets, excluding the net impact of investments in our new Scottsdale, Arizona campus and bond premium amortization. We believe that free cash flow and adjusted free cash flow excluding the impact of bond premium amortization and net campus investment are non-GAAP measures that are useful to investors and management to evaluate the Company's ability to generate cash. These non-GAAP measures can also be used to evaluate the Company's ability to generate cash flow from operations and the impact that this cash flow has on the Company's liquidity. Caution on Use of Non-GAAP Measures Although these non-GAAP financial measures are not consistent with GAAP, management believes investors will benefit by referring to these non-GAAP financial measures when assessing the Company's operating results, as well as when forecasting and analyzing future periods. However, management recognizes that: these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to the Company's GAAP financial measures; these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, the Company's GAAP financial measures; these non-GAAP financial measures should not be considered to be superior to the Company's GAAP financial measures; and these non-GAAP financial measures were not prepared in accordance with GAAP or under a comprehensive set of rules or principles proposed by a third party. Further, these non-GAAP financial measures may be unique to the Company, as they may be different from similarly titled non-GAAP financial measures used by other companies. As such, this presentation of non-GAAP financial measures may not enhance the comparability of the Company's results to the results of other companies. About AxonAxon is a technology leader in global public safety. Our moonshot goal is to cut gun-related deaths between police and the public by 50% before 2033. Axon is building the public safety operating system of the future by integrating a suite of hardware devices and cloud software solutions that lead modern policing. Axon's suite includes TASER energy devices, body cameras, in-car cameras, robotic security and training, cloud-hosted digital evidence management solutions, productivity software and real-time operations capabilities. Axon's growing global customer base includes first responders across international, federal, state and local law enforcement, fire, corrections and emergency medical services, as well as the justice sector, enterprises and consumers. Non-Axon trademarks are property of their respective owners. Axon, Axon Body, Draft One, Redaction Assistant, TASER, TASER 10, the Filled Bolt within Circle Logo and the Delta Logo are trademarks of Axon Enterprise, Inc., some of which are registered in the United States and other countries. For more information, visit All rights reserved. Forward-looking StatementsForward-looking statements in this letter include, without limitation, statements regarding: proposed products and services and related development efforts and activities; expectations about the market for our current and future products and services, including statements related to our user base and customer profiles; the impact of pending litigation; strategies and trends relating to subscription plan programs and revenues; statements related to recently completed acquisitions; our anticipation that contracts with governmental customers will be fulfilled; our expectations about the future implementation of new strategies related to artificial intelligence; the timing and realization of future contracted revenue; the fulfillment of bookings; strategies and trends, including the amounts and benefits of R&D investments; the sufficiency of our liquidity and financial resources; expectations about customer behavior; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance, including our outlook for 2025 full year revenue, stock-based compensation expense, Adjusted EBITDA, Adjusted EBITDA margin and capital expenditures; statements of management's strategies, goals and objectives and other similar expressions; as well as the ultimate resolution of financial statement items requiring critical accounting estimates, including those set forth in our Annual Report on Form 10‑K for the year ended December 31, 2024 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as "may," "will," "should," "could," "would," "predict," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "estimate," and similar expressions, as well as statements in future tense, identify forward-looking statements. However, not all forward-looking statements contain these identifying words. We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. The following important factors could cause actual results to differ materially from those in the forward-looking statements: our exposure to cancellations of government contracts due to non-appropriation clauses, exercise of a cancellation clause or non-exercise of contractually optional periods; the ability of law enforcement agencies to obtain funding, including based on tax revenues; our ability to design, introduce and sell new products, services or features; our ability to defend against litigation and protect our intellectual property, and the resulting costs of this activity; our ability to win bids through the open bidding process for governmental agencies; our ability to manage our supply chain and avoid production delays, shortages and impacts to expected gross margins; the impacts of inflation, macroeconomic conditions and global events; the impact of catastrophic events or public health emergencies; the impact of stock-based compensation expense, impairment expense and income tax expense on our financial results; customer purchase behavior, including adoption of our software as a service delivery model; negative media publicity or sentiment regarding our products; the impact of various factors on projected gross margins; defects in, or misuse of, our products; changes in the costs of product components and labor; loss of customer data, a breach of security or an extended outage, including by our third-party cloud-based storage providers; exposure to international operational risks; delayed cash collections and possible credit losses due to our subscription model; changes in government regulations in the United States and in foreign markets, especially related to the classification of our products by the United States Bureau of Alcohol, Tobacco, Firearms and Explosives; our ability to integrate acquired businesses; the impact of declines in the fair values or impairment of our investments, including our strategic investments; our ability to attract and retain key personnel; litigation or inquiries and related time and costs; our ability to remediate the material weakness in our internal controls; and counterparty risks relating to cash balances held in excess of federally insured limits. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements. These factors are intended as cautionary statements for investors within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Readers can find them under the heading "Risk Factors" in our Annual and Quarterly Reports, and investors should refer to them. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties. Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 8-K, 10‑Q and 10‑K reports to the SEC. Our filings with the SEC may be accessed at the SEC's website at AXON ENTERPRISE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024 Net sales from products $ 376,360$ 340,896$ 292,763$ 717,256$ 563,187 Net sales from services 292,178262,737210,473554,915399,920 Net sales 668,538603,633503,2361,272,171963,107 Cost of product sales 193,507170,181142,627363,688294,787 Cost of service sales 71,28867,71354,453139,001103,536 Cost of sales 264,795237,894197,080502,689398,323 Gross margin 403,743365,739306,156769,482564,784 Operating expenses:Selling, general and administrative 242,212223,509170,964465,721322,039 Research and development 162,567151,023101,434313,590192,531 Total operating expenses 404,779374,532272,398779,311514,570 Income (loss) from operations (1,036)(8,793)33,758(9,829)50,214 Interest income 23,25310,60411,65333,85723,783 Interest expense (28,686)(7,821)(1,871)(36,507)(3,627) Other income (loss), net (32,414)114,4017,93481,987147,000 Income (loss) before provision for income taxes (38,883)108,39151,47469,508217,370 Provision for (benefit from) income taxes (75,000)20,41110,001(54,589)42,545 Net income $ 36,117$ 87,980$ 41,473$ 124,097$ 174,825 Net income per common and common equivalent shares:Basic $ 0.46$ 1.14$ 0.55$ 1.60$ 2.32 Diluted $ 0.44$ 1.08$ 0.53$ 1.52$ 2.26 Weighted average number of common andcommon equivalent shares outstanding:Basic 77,99976,89075,51177,44875,433 Diluted 82,06281,48477,55081,78277,346 AXON ENTERPRISE, INC. SALES BY PRODUCT AND SERVICE (in thousands) (unaudited) THREE MONTHS ENDEDTHREE MONTHS ENDEDTHREE MONTHS ENDED 30 JUN 202531 MAR 202530 JUN 2024Connected DevicesSoftware & ServicesTotalConnectedDevicesSoftware & ServicesTotalConnected DevicesSoftware &ServicesTotal TASER (1) $ 216,234$ —$ 216,234$ 195,495$ —$ 195,495$ 181,548$ —$ 181,548 Personal Sensors (2) 92,819—92,81988,405—88,40575,113—75,113 Platform Solutions (3) 67,307—67,30756,996—56,99636,102—36,102 Software and Services —292,178292,178—262,737262,737—210,473210,473 Total $ 376,360$ 292,178$ 668,538$ 340,896$ 262,737$ 603,633$ 292,763$ 210,473$ 503,236 ____________________________________________________________________________________ (1) 'TASER' includes TASER handles, cartridges and related extended warranties. (2) 'Personal Sensors' primarily includes body cameras and accessories, signal sidearm, and related extended warranties. (3) 'Platform Solutions' primarily includes interview room, fleet in-car video, fixed cameras, drones and counter-drone equipment, virtual reality training hardware, and related extended warranties. SIX MONTHS ENDEDSIX MONTHS ENDED30 JUN 202530 JUN 2024ConnectedDevicesSoftware & ServicesTotalConnectedDevicesSoftware & ServicesTotal TASER (1) $ 411,729$ —$ 411,729$ 346,147$ —$ 346,147 Personal Sensors (2) 181,224—181,224143,113—143,113 Platform Solutions (3) 124,303—124,30373,927—73,927 Software and Services —554,915554,915—399,920399,920 Total $ 717,256$ 554,915$ 1,272,171$ 563,187$ 399,920$ 963,107 ____________________________________________________________________________________ (1) 'TASER' includes TASER handles, cartridges and related extended warranties. (2) 'Personal Sensors' primarily includes body cameras and accessories, signal sidearm, and related extended warranties. (3) 'Platform Solutions' primarily includes interview room, fleet in-car video, fixed cameras, drones and counter-drone equipment, virtual reality training hardware, and related extended warranties. SALES BY GEOGRAPHY (in thousands) (unaudited) THREE MONTHS ENDEDTHREE MONTHS ENDEDTHREE MONTHS ENDED30 JUN 202531 MAR 202530 JUN 2024 United States $ 537,37380 %$ 529,38388 %$ 424,63884 % Other countries 131,1652074,2501278,59816 Total $ 668,538100 %$ 603,633100 %$ 503,236100 % SIX MONTHS ENDEDSIX MONTHS ENDED30 JUN 202530 JUN 2024 United States $ 1,066,75684 %$ 816,17985 % Other countries 205,41516146,92815 Total $ 1,272,171100 %$ 963,107100 % AXON ENTERPRISE, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands) THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024 EBITDA and Adjusted EBITDA:Net income $ 36,117$ 87,980$ 41,473$ 124,097$ 174,825 Depreciation and amortization 19,32419,19513,00038,51924,564 Interest expense 28,6867,8211,87136,5073,627 Investment interest income (23,253)(10,604)(11,653)(33,857)(23,783) Provision for (benefit from) income taxes (75,000)20,41110,001(54,589)42,545 EBITDA $ (14,126)$ 124,803$ 54,692$ 110,677$ 221,778 Non-GAAP adjustments:Stock-based compensation expense $ 139,244$ 140,239$ 74,821$ 279,483$ 149,936 Unrealized and realized losses (gains) on investments and marketable securities, net 33,728(143,921)(7,967)(110,193)(105,386) Realized gains on previously held minority interests acquired in business combinations, net ——(21)—(42,313) Debt inducement expense —28,666—28,666— Transaction costs related to strategic investments and acquisitions 2,2302,7274,1364,95710,493 Inventory step-up amortization —607—607— Litigation costs and related recoveries 7742,049—2,823224 Payroll taxes related to 2024 Employee XSP vesting 9,782——9,782— Adjusted EBITDA $ 171,632$ 155,170$ 125,661$ 326,802$ 234,732 Net income as a percentage of net sales 5.4 %14.6 %8.2 %9.8 %18.2 % Adjusted EBITDA as a percentage of net sales 25.7 %25.7 %25.0 %25.7 %24.4 % Stock-based compensation expense:Cost of product and service sales $ 12,561$ 12,887$ 8,517$ 25,448$ 38,112 Selling, general and administrative expenses 72,18771,34738,633143,53461,788 Research and development expenses 54,49656,00527,671110,50150,036 Total stock-based compensation expense $ 139,244$ 140,239$ 74,821$ 279,483$ 149,936 THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024 Non-GAAP net income:GAAP net income $ 36,117$ 87,980$ 41,473$ 124,097$ 174,825 Non-GAAP adjustments:Stock-based compensation expense 139,244140,23974,821279,483149,936 Unrealized and realized losses (gains) oninvestments and marketable securities, net 32,167(143,921)(7,967)(111,754)(105,386) Realized gains on previously held minority interests acquired in business combinations, net ——(21)—(42,313) Debt inducement expense —28,666—28,666— Transaction costs related to strategic investments and acquisitions 2,2302,7274,1364,95710,493 Inventory step-up amortization —607—607— Litigation costs and related recoveries 7742,049—2,823224 Payroll taxes related to 2024 Employee XSP vesting 9,782——9,782— Income tax effects (46,579)(3,412)(17,531)(49,991)(3,884) Non-GAAP net income $ 173,735$ 114,935$ 94,911$ 288,670$ 183,895 Non-GAAP net income as a percentage of net sales 26.0 %19.0 %18.9 %22.7 %19.1 % Diluted income per common shareGAAP $ 0.44$ 1.08$ 0.53$ 1.52$ 2.26 Non-GAAP $ 2.12$ 1.41$ 1.22$ 3.53$ 2.38 Weighted average number of diluted common and common equivalent shares outstanding 82,06281,48477,55081,78277,346 AXON ENTERPRISE, INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - continued (in thousands) THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024 Net sales $ 668,538$ 603,633$ 503,236$ 1,272,171$ 963,107 Cost of sales 264,795237,894197,080502,689398,323 Gross margin 403,743365,739306,156769,482564,784 Stock-based compensation expense 12,56112,8878,51725,44838,112 Amortization of acquired intangible assets 5,1864,9632,99010,1495,278 Inventory step-up amortization —607—607— Payroll taxes related to 2024 Employee XSP vesting 1,488——1,488— Adjusted gross margin $ 422,978$ 384,196$ 317,663$ 807,174$ 608,174 Gross margin 60.4 %60.6 %60.8 %60.5 %58.6 % Adjusted gross margin 63.3 %63.6 %63.1 %63.4 %63.1 % Connected Devices THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024 Net sales $ 376,360$ 340,896$ 292,763$ 717,256$ 563,187 Cost of sales 193,507170,181142,627363,688294,787 Gross margin 182,853170,715150,136353,568268,400 Stock-based compensation expense 7,5837,4765,88315,05933,710 Amortization of acquired intangible assets 1,3331,3373512,670676 Inventory step-up amortization —607—607— Payroll taxes related to 2024 Employee XSP vesting 634——634— Adjusted gross margin $ 192,403$ 180,135$ 156,370$ 372,538$ 302,786 Gross margin 48.6 %50.1 %51.3 %49.3 %47.7 % Adjusted gross margin 51.1 %52.8 %53.4 %51.9 %53.8 % Software and Services THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024 Net sales $ 292,178$ 262,737$ 210,473$ 554,915$ 399,920 Cost of sales 71,28867,71354,453139,001103,536 Gross margin 220,890195,024156,020415,914296,384 Stock-based compensation expense 4,9785,4112,63410,3894,402 Amortization of acquired intangible assets 3,8533,6262,6397,4794,602 Payroll taxes related to 2024 Employee XSP vesting 854——854— Adjusted gross margin $ 230,575$ 204,061$ 161,293$ 434,636$ 305,388 Gross margin 75.6 %74.2 %74.1 %75.0 %74.1 % Adjusted gross margin 78.9 %77.7 %76.6 %78.3 %76.4 % AXON ENTERPRISE, INC. CONSOLIDATED BALANCE SHEETS (in thousands) 30 JUN 202531 DEC 2024(Unaudited) ASSETSCurrent Assets:Cash and cash equivalents $ 615,496$ 454,844 Short-term investments 1,471,304333,235 Marketable securities 144,000198,270 Accounts and notes receivable, net of allowance 627,961547,572 Contract assets, net 463,371367,929 Inventory 308,492265,316 Prepaid expenses and other current assets 197,738130,315 Total current assets 3,828,3622,297,481 Property and equipment, net 271,240247,324 Deferred tax assets, net 357,417304,282 Intangible assets, net 162,588175,157 Goodwill 762,245756,838 Long-term notes receivable, net 1,6313,460 Long-term contract assets, net 161,905119,876 Strategic investments 403,500332,550 Other long-term assets 266,368237,620 Total assets $ 6,215,256$ 4,474,588 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:Accounts payable $ 118,110$ 71,955 Accrued liabilities 265,832279,193 Current portion of deferred revenue 603,417612,955 Current portion of notes payable, net 279,247680,289 Customer deposits 19,41220,626 Other current liabilities 11,05312,857 Total current liabilities 1,297,0711,677,875 Deferred revenue, net of current portion 329,045360,685 Liability for unrecognized tax benefits 32,11225,007 Long-term deferred compensation 20,51215,877 Long-term lease liabilities 43,63841,383 Long-term notes payable, net 1,728,575— Other long-term liabilities 31,90326,096 Total liabilities 3,482,8562,146,923 Stockholders' Equity:Preferred stock —— Common stock 11 Additional paid-in capital 1,964,9531,689,781 Treasury stock (155,947)(155,947) Retained earnings 936,111812,014 Accumulated other comprehensive loss (12,718)(18,184) Total stockholders' equity 2,732,4002,327,665 Total liabilities and stockholders' equity $ 6,215,256$ 4,474,588 AXON ENTERPRISE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024(Unaudited)(Unaudited)(Unaudited)(Unaudited)(Unaudited) Cash flows from operating activities:Net income $ 36,117$ 87,980$ 41,473$ 124,097$ 174,825 Adjustments to reconcile net income to net cash provided by (used in) operating activities: — Stock-based compensation 139,244140,23974,821279,483149,936 Gain on strategic investments and marketable securities, net 32,167(143,921)(7,988)(111,754)(147,699) Debt inducement expense —28,666—28,666— Depreciation and amortization 17,15719,45310,38636,61017,742 Provision for bad debts and inventory 2,4543,8009,5046,25411,084 Deferred income taxes (21,297)(48,768)(28,425)(70,065)(7,755) Other noncash items 9,7639,5153,78019,2786,364 Change in assets and liabilities:Receivables and contract assets (139,268)(73,565)(20,355)(212,833)(77,092) Inventory (31,112)(16,986)(14,885)(48,098)(16,959) Deferred revenue (84,648)33,505(27,620)(51,143)(8,499) Accounts payable, accrued and other liabilities 12,5648,61142,30821,175(43,532) Prepaid expenses and other assets (64,845)(22,735)(236)(87,580)8,410 Net cash provided by (used in) operating activities (91,704)25,79482,763(65,910)66,825 Cash flows from investing activities:Purchases of investments (714,693)(1,079,169)(240,404)(1,793,862)(490,989) Business combinations, net of cash acquired (3,809)—(25)(3,809)(237,796) Proceeds from call, maturity, and sale of investments 354,843401,811333,886756,654664,358 Purchases of property and equipment (22,953)(24,862)(11,318)(47,815)(27,512) Other, net 803—8334 Net cash used in investing activities (386,532)(702,217)82,139(1,088,749)(91,905) Cash flows from financing activities:Net proceeds from equity offering 183,960——183,960— Proceeds from issuance of notes —1,750,000—1,750,000— Principal payments for induced conversion of convertible debt —(407,453)—(407,453)— Payments to third-parties for debt issuance, amendment and repurchase activity (525)(24,210)—(24,735)— Income and payroll tax payments for net-settled stock awards (187,800)(5,035)(2,185)(192,835)(4,895) Other, net —(76)—(76)— Net cash provided by (used in) financing activities (4,365)1,313,226(2,185)1,308,861(4,895) Effect of exchange rate changes on cash and cash equivalents 5,3051,192(108)6,497(2,086) Net increase (decrease) in cash and cash equivalents (477,296)637,995162,609160,699(32,061) Cash and cash equivalents and restricted cash, beginning of period 1,104,758466,763406,000466,763600,670 Cash and cash equivalents and restricted cash, end of period $ 627,462$ 1,104,758$ 568,609$ 627,462$ 568,609 AXON ENTERPRISE, INC. SELECTED CASH FLOW INFORMATION (in thousands) THREE MONTHS ENDEDSIX MONTHS ENDED30 JUN 202531 MAR 202530 JUN 202430 JUN 202530 JUN 2024 Net cash provided by (used in) operating activities $ (91,704)$ 25,794$ 82,763$ (65,910)$ 66,825 Purchases of property and equipment (22,953)(24,862)(11,318)(47,815)(27,512) Free cash flow, a non-GAAP measure (114,657)93271,445(113,725)39,313 Bond premium amortization 3,2891,2603,3974,5498,387 Net campus investment 6535164581,1691,491 Adjusted free cash flow, a non-GAAP measure $ (110,715)$ 2,708$ 75,300$ (108,007)$ 49,191 AXON ENTERPRISE, INC. SUPPLEMENTAL TABLES (in thousands) 30 JUN 202531 DEC 2024 Cash and cash equivalents $ 615,496$ 454,844 Current restricted cash 11,96611,919 Short-term investments 1,471,304333,235 Cash, cash equivalents, restricted cash and investments, net 2,098,766799,998 Current portion of notes payable, principal amount (282,547)(690,000) Long-term notes payable, principal amount (1,750,000)— Total cash, cash equivalents, restricted cash and investments, net of notes payable $ 66,219$ 109,998 CONTACT: Investor RelationsAxon Enterprise, View original content to download multimedia: SOURCE Axon
