TASER Reports 2016 Fourth Quarter and Full Year Results

Record Quarterly Revenues of $82.1 million, Up 46% Year-Over-Year
Axon Bookings Grew 62% Year-Over-Year to $72.5 million

SCOTTSDALE, Ariz., Feb. 28, 2017 /PRNewswire/ -- TASER International, Inc. (NASDAQ: TASR), today announced financial results for the fourth quarter and full year ended December 31, 2016.

"We ended 2016 with record fourth quarter revenues, record order bookings and strong momentum across our business lines in both domestic and international markets," commented Rick Smith, TASER CEO and Founder. "We are delighted to see accelerating adoption of our technology platform by our law enforcement customers. Our investments to build the preeminent technology ecosystem in public safety have driven substantial growth by affording our customers greater capabilities with a better user experience. We look forward to continuing the expansion of our ecosystem with our new Fleet in-car system, more sensors like Signal Sidearm, our new Records Management System (RMS) and industry leading analytics with new Axon Artificial Intelligence capabilities in 2017 and beyond."

Fourth Quarter 2016 Financial Highlights:

  • Net sales increased 46% to $82.1 million in the fourth quarter of 2016 compared to $56.0 million in the fourth quarter of 2015. International sales were $18.6 million in the fourth quarter of 2016 compared to $12.1 million in the fourth quarter of 2015. 
  • TASER Weapons segment revenues increased 25% to $58.3 million in the fourth quarter of 2016 compared to $46.7 million in the fourth quarter of 2015.
  • Axon segment revenues increased 154% to $23.7 million in the fourth quarter of 2016 compared to $9.4 million in the fourth quarter of 2015.
  • Consolidated gross margin was 61% in the fourth quarter of 2016 compared to 66% in the fourth quarter of 2015.
  • TASER Weapons segment gross margin percentage remained relatively unchanged at 69% in the fourth quarter of 2016 compared to 70% in the fourth quarter of 2015.
  • Axon segment gross margin percentage was 39% in the fourth quarter of 2016 compared to 46% in the fourth quarter of 2015. The decrease was driven by lower Axon hardware margins partially offset by higher Axon service margins.
  • Net income for the fourth quarter of 2016 was $6.3 million, or $0.12 per diluted share, compared to  $5.1 million, or $0.09 per diluted share, for the same period in 2015.
  • Adjusted EBITDA for the fourth quarter of 2016 was $13.1 million compared to $11.7 million in the fourth quarter of 2015.
  • In the fourth quarter of 2016, the Company used $4.0 million in cash from operating activities. 

Full Year 2016 Financial Highlights:

  • Net sales increased 36% to $268.2 million for the full year 2016 compared to $197.9 million for the full year 2015.
  • TASER Weapons segment revenues increased 25% to $202.6 million for the full year 2016 compared to $162.4 million for the full year 2015.
  • Axon segment revenues increased 85% to $65.6 million for the full year 2016 compared to $35.5 million for the full year 2015.
  • Consolidated gross margin was 64% for the full year 2016 compared to 65% for the full year 2015.
  • Net income for the full year 2016 was $17.3 million, or $0.32 per diluted share, compared to $19.9 million, or $0.36 per diluted share, for the same period in 2015.
  • Adjusted EBITDA for the full year 2016 was $44.6 million compared to $46.1 million for the full year 2015.
  • For the full year 2016, the Company generated $17.9 million in cash from operating activities. Cash, cash equivalents and investments were $89.3 million at December 31, 2016, down from $118.3 million at December 31, 2015. During 2016 the Company used $33.7 million to repurchase shares of the Company's stock. 

Business Highlights:

  • As of the end of the fourth quarter of 2016, 35 of the 68 major city law enforcement agencies have purchased TASER's Axon body-worn cameras and/or its digital evidence management solution: Albuquerque, Atlanta, Baltimore, Baltimore County, Charlotte-Mecklenburg, Chicago, Cincinnati, Cleveland, Dallas, Denver, Fort Worth, Fresno, Kansas City, Los Angeles, Las Vegas, Louisville, Memphis, Mesa, Miami, Milwaukee, Minneapolis, Montgomery County, New Orleans, Omaha, Philadelphia, Pittsburgh, Salt Lake City, San Antonio, San Diego, San Francisco, San Jose, Seattle, Tampa, Tucson, Washington, DC, and Wichita.
  • Axon platform user count continued to grow, extending the Company's market leadership. During the three months ended December 31, 2016, the Company booked approximately 21,400 seats on its digital evidence management platform, Evidence.com, net of renewals. Since inception, the Company has booked cumulative Evidence.com licenses of approximately 132,000.

Quarterly Conference Call:

The Company will host its fourth quarter 2016 earnings conference call on Tuesday, February 28, 2017 at 4:30 p.m. ET. To join the live audio presentation, please dial toll free 877-303-9126, or for international callers, please dial +1-253-237-1156. The passcode is 77335352.

The Company has posted supplemental materials including its key operating metrics on its website to provide additional information about our fourth quarter financial results.

The Company plans to update and post its investor relations presentation to http://investor.taser.com within the next two weeks with the fourth quarter results. Archived presentations from previous quarters can also be found on the website.

Statistical Definitions:

  • Axon cameras and Evidence.com bookings represent a statistical measure defined as the sales price of orders placed in the relevant time period. Bookings are an indication of the activity the Company is seeing relative to Axon cameras and Evidence.com. We consider bookings to be a statistical measure defined as the sales price of orders (not invoiced sales) placed in the relevant fiscal period, net of cancellations, regardless of when the products or services ultimately will be provided. Some bookings might be invoiced in subsequent years.

Due to municipal government funding rules, certain of the future year amounts included in bookings are subject to budget appropriation or other contract cancellation clauses. Although TASER has entered into contracts for the delivery of products and services in the future and anticipates the contracts will be completed, if agencies invoke a cancellation clause or do not appropriate funds in future year budgets, revenue associated with these bookings will ultimately not be recognized, resulting in a future reduction to bookings.

For more information relative to our revenue recognition policies, please reference our SEC filings.

Non-GAAP Measures:

To supplement the Company's financial results presented in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), we present the non-GAAP financial measures of EBITDA, Adjusted EBITDA and Free Cash Flow. Our 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 our performance, and when planning and forecasting our future periods. A reconciliation of GAAP to the non-GAAP financial measures is presented at the end of the release.

EBITDA is defined as consolidated net income before interest expense, income taxes and depreciation and amortization. Adjusted EBITDA, as presented herein, is defined as EBITDA before certain other items, including: stock-based compensation; and net gain/loss on write-down/disposal of property, equipment and intangible assets.

Free Cash Flow is defined as cash flows provided by operating activities minus purchases of property, plant and equipment and intangible assets.

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 and investors should not assume that the non-GAAP financial measures presented in this earnings release were prepared under a comprehensive set of rules or principles.

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 TASER International, Inc.

TASER International makes communities safer with innovative public safety technologies. Founded in 1993, TASER first transformed law enforcement with its electrical weapons. TASER continues to define smarter policing with its growing suite of technology solutions, including Axon body-worn video cameras and Evidence.com, a secure digital evidence management platform. More than 174,000 lives saved from death or serious injury and countless dollars have been saved with TASER's products and services.

Learn more at www.taser.com and www.axon.io or by calling (800) 978-2737.

TASER® and Axon® are registered trademark of TASER International, Inc., registered in the U.S. All rights reserved. TASER logo, Axon, Axon Body, Axon Body 2, Axon Flex, Axon Interview,  Axon Signal, TASER X26, TASER X26P, TASER CAM and TASER X2 are trademarks of TASER International, Inc. All rights are reserved for trademarks of TASER International, Inc.

Note to Investors

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including statements regarding our expectations, beliefs, intentions or strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. The forward-looking information is based upon current information and expectations regarding TASER International, Inc. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict. TASER International assumes no obligation to update the information contained in this press release, except as required by law.

We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward looking statements herein. Such factors include, but are not limited to: the adverse effect of the United Kingdom's exit from the European Union; market acceptance of our products; our dependence on sales of our TASER X26P and X2 CEWs; our ability to design, introduce and sell new products; delays in development schedules; rapid technological change and competition; product defects; breach of our security measures resulting in unauthorized access to customer data; outages and disruptions relating to our Evidence.com service; budgetary and political constraints of prospects and customers; the length of our sales cycle and our ability to realize benefits from our marketing and selling efforts; our exposure to cancellations of government contracts due to appropriation clauses; changes in civil forfeiture laws; the long-term revenue recognition cycle for our SaaS Evidence.com product; our reliance on third party cloud-based storage providers; litigation risks resulting from alleged product-related injuries and media publicity concerning allegations of deaths occurring after use of the TASER device and the negative impact this publicity could have on sales; the outcome of pending or future litigation; our ability to protect our intellectual property as well as intellectual property infringement claims and relating litigation costs; our successful identification of existing intellectual property rights that might infringe on our developments; competition in foreign countries relating to our inability to protect our patents; risks of governmental regulations, including regulations of our products by the United States Consumer Product Safety Commission, regulation of our products as a "crime control" product by the Federal government, state and local government regulation and foreign regulation and the adverse effects that could result from our products being classified as firearms by the United States Bureau of Alcohol, Tobacco, Firearms and Explosives; regulatory and political challenges presented by international markets; our compliance with regulations governing the environment, including but not limited to, regulations within the European Union; regulations relating to voice, data and communications services; regulations relating to conflict minerals;  our dependence on third party suppliers for key components of our products; component shortages; rising costs of raw materials and transportation relating to petroleum prices; that we may experience declines in gross margins due to a shift in product sales from conducted electrical weapons to Axon devices; our ability to manage our growth and increase manufacturing production to meet demand; establishment and expansion of our direct and indirect distribution channels; our ability to pursue sales directly with customers; risks relating to acquisitions and joint ventures; goodwill impairment; catastrophic events; quarterly fluctuations in our operating results; the adverse effects on our operations and financial results from foreign currency fluctuations; fluctuations in our effective tax rate; counter-party risks relating to cash balances held in excess of FDIC insurance limits; employee retention risks; volatility in our stock price; and other factors identified in documents filed by us with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2015 and Forms 10-Q for the quarters ended March 31, 2016, June 30, 2016, and September 30, 2016.

Please visit http://investor.taser.com, www.twitter.com/officialtaser, www.twitter.com/axontechnology and www.facebook.com/TASER.International where TASER discloses information from time to time about the company, its financial information, and its business.

For investor relations information please contact Arvind Bobra via email at [email protected].

TASER INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)



Three Months Ended December 31,


Twelve Months Ended December 31,


2016


2015


2016


2015









Net sales

$

82,077



$

56,041



$

268,245



$

197,892


Cost of products sold and services delivered

32,307



19,053



97,709



69,245


Gross margin

49,770



36,988



170,536



128,647


Operating expenses:








Sales, general and administrative

30,743



21,856



108,076



69,698


Research and development

9,614



6,622



30,609



23,614


Total operating expenses

40,357



28,478



138,685



93,312


Income from operations

9,413



8,510



31,851



35,335


Interest income and other (expense), net

106



14



(354)



26


Income before provision for income taxes

9,519



8,524



31,497



35,361


Provision for income taxes

3,178



3,420



14,200



15,428


Net income

$

6,341



$

5,104



$

17,297



$

19,933


Net income per common and common equivalent shares:








Basic

$

0.12



$

0.10



$

0.33



$

0.37


Diluted

$

0.12



$

0.09



$

0.32



$

0.36


Weighted average number of common and common equivalent shares outstanding:








Basic

52,299



53,665



52,667



53,548


Diluted

53,173



54,523



53,536



54,638


 

TASER INTERNATIONAL, INC.

SEGMENT REPORTING

(Unaudited)

(dollars in thousands)



Three Months Ended December 31, 2016


Three months ended December 31, 2015


TASER
Weapons


Axon


Total


TASER
Weapons


Axon


Total













Product sales

$

58,337



$

12,491



$

70,828



$

46,689



$

4,678



$

51,367


Service revenue



11,249



11,249





4,674



4,674


Net sales

58,337



23,740



82,077



46,689



9,352



56,041


Cost of products sold

17,932



12,432



30,364



14,016



3,509



17,525


Cost of services delivered



1,943



1,943





1,528



1,528


Gross margin

40,405



9,365



49,770



32,673



4,315



36,988


Sales, general and administrative

17,222



13,521



30,743



14,171



7,685



21,856


Research and development

2,114



7,500



9,614



1,052



5,570



6,622


Income (loss) from operations

$

21,069



$

(11,656)



$

9,413



$

17,450



$

(8,940)



$

8,510














Gross margin %

69.3

%


39.4

%


60.6

%


70.0

%


46.1

%


66.0

%

Operating margin %

36.1

%


(49.1)

%


11.5

%


37.4

%


(95.6)

%


15.2

%

 


Twelve Months Ended December 31, 2016


Twelve Months Ended December 31, 2015


TASER
Weapons


Axon


Total


TASER
Weapons


Axon


Total













Product sales

$

202,644



$

35,929



$

238,573



$

162,375



$

22,855



$

185,230


Service revenue



29,672



29,672





12,662



12,662


Net sales

202,644



65,601



268,245



162,375



35,517



197,892


Cost of products sold

61,930



29,606



91,536



48,821



16,201



65,022


Cost of services delivered



6,173



6,173





4,223



4,223


Gross margin

140,714



29,822



170,536



113,554



15,093



128,647


Sales, general and administrative

63,617



44,459



108,076



47,640



22,058



69,698


Research and development

5,887



24,722



30,609



4,470



19,144



23,614


Income (loss) from operations

$

71,210



$

(39,359)



$

31,851



$

61,444



$

(26,109)



$

35,335














Gross margin %

69.4

%


45.5

%


63.6

%


69.9

%


42.5

%


65.0

%

Operating margin %

35.1

%


(60.0)

%


11.9

%


37.8

%


(73.5)

%


17.9

%

 

TASER INTERNATIONAL, INC.

Axon and Evidence.com Bookings by Quarter

(Unaudited)

(in thousands)



December 31,
2016


September 30,
2016


June 30, 2016


March 31,

2016


December 31,
2015











Bookings

$

72,509



$

57,491



$

72,034



$

52,059



$

44,668






















Axon cameras and Evidence.com bookings represent a statistical measure defined as the sales price of orders placed in the relevant time period. Bookings are an indication of the activity the Company is seeing relative to Axon cameras and Evidence.com.  We consider bookings to be a statistical measure defined as the sales price of orders (not invoiced sales) placed in the relevant fiscal period, net of cancellations, regardless of when the products or services ultimately will be provided. Some bookings might be invoiced in subsequent years.

Due to municipal government funding rules, certain of the future year amounts included in bookings are subject to budget appropriation or other contract cancellation clauses. Although the Company has entered into contracts for the delivery of products and services in the future and anticipates the contracts will be completed, if agencies do not appropriate money in future year budgets or invoke a cancellation clause, revenue associated with these bookings will not ultimately be recognized, resulting in a future reduction to bookings. For more information relative to our revenue recognition policies, please reference our SEC filings.  

 

Axon and Evidence.com Future Contracted Revenue

(Unaudited)

(in thousands)



December 31,
2016


September 30,
2016

Cumulative Bookings, net of cancellations

$

464,579



$

392,070


Cumulative Axon & Evidence.com Recognized Revenue

(113,787)



(90,047)


Future Contracted Revenue

$

350,792



$

302,023


Axon and Evidence.com future contracted revenue represent a statistical measure defined as cumulative bookings for Axon and Evidence.com minus cumulative recognized revenue related solely to Axon and Evidence.com. Future contracted revenues are an indication of momentum of longer-term contracts being signed and the expectations of future revenues in the Axon segment.

 

TASER INTERNATIONAL, INC.

UNIT SALES STATISTICS

(Unaudited)

Units in whole numbers



Three Months Ended December 31,


Twelve Months Ended December 31,


2016


2015


Unit Change


Percent
Change


2016


2015


Unit Change


Percent
Change

TASER X26P

20,833



16,437



4,396



26.7

%


79,218



62,383



16,835



27.0

%

TASER X2

13,003



12,540



463



3.7



47,700



38,050



9,650



25.4


TASER X26

769



587



182



31.0



2,655



4,928



(2,273)



(46.1)


TASER Pulse and Bolt

3,027



2,336



691



29.6



9,549



8,121



1,428



17.6


Cartridges

554,395



505,332



49,063



9.7



1,979,051



1,694,450



284,601



16.8


Axon Body

25,177



2,141



23,036



1,075.9



66,154



17,522



48,632



277.5


Axon Flex

3,147



2,902



245



8.4



14,173



18,823



(4,650)



(24.7)


Axon Dock

5,747



1,425



4,322



303.3



16,983



6,979



10,004



143.3


TASER Cam

3,106



2,641



465



17.6



9,566



11,634



(2,068)



(17.8)


 

TASER INTERNATIONAL, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)

Dollars in thousands



Three Months Ended

December 31,


Twelve Months Ended

December 31,


2016


2015


2016


2015









Net income

$

6,341



$

5,104



$

17,297



$

19,933


   Depreciation and amortization

914



981



3,658



3,291


   Interest expense

3



1



13



10


   Provision for income taxes

3,178



3,420



14,200



15,428


EBITDA

$

10,436



$

9,506



$

35,168



$

38,662










Adjustments:








Stock-based compensation expense

$

2,627



$

2,177



$

9,369



$

7,263


Net loss on disposal of property, equipment and intangibles, net



3



61



206


Adjusted EBITDA

$

13,063



$

11,686



$

44,598



$

46,131


Adjusted EBITDA as a percentage of net sales

15.9

%


20.9

%


16.6

%


23.3

%









Composition of stock-based compensation:



Three Months Ended

December 31,


Twelve Months Ended

December 31,


2016


2015


2016


2015









Cost of products sold and services delivered

$

95



$

126



$

342



$

402


Sales, general and administrative

1,510



1,303



5,707



4,285


Research and development

1,022



748



3,320



2,576



$

2,627



$

2,177



$

9,369



$

7,263


 

TASER INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)



December 31, 2016


December 31, 2015





ASSETS








Current Assets:




Cash and cash equivalents

$

40,651



$

59,526


Short-term investments

48,415



50,254


Accounts and notes receivable, net

39,466



27,701


Inventory

34,841



15,763


Prepaid expenses and other current assets

13,858



8,165


Total current assets

177,231



161,409






Property and equipment, net

24,004



21,848


Deferred income tax assets, net

19,515



13,719


Intangible assets, net

15,218



7,588


Goodwill

10,442



9,596


Long-term investments

234



8,525


Long-term accounts and notes receivable, net of current portion

17,602



1,227


Other assets

13,917



5,969


Total assets

$

278,163



$

229,881






LIABILITIES AND STOCKHOLDERS' EQUITY












Current Liabilities:




Accounts payable

$

10,736



$

7,333


Accrued liabilities

18,248



8,643


Current portion of deferred revenue

45,137



20,851


Customer deposits

2,148



1,226


Current portion of business acquisition contingent consideration

1,690




Other current liabilities

80



87


Total current liabilities

78,039



38,140






Deferred revenue, net of current portion

40,054



30,190


Liability for unrecognized tax benefits

1,896



1,315


Long-term deferred compensation

3,362



2,199


Business acquisition contingent consideration, net of current portion

1,635



952


Other long-term liabilities

2,289



81


Total liabilities

127,275



72,877






Stockholders' Equity:




Preferred stock




Common stock

1



1


Additional paid-in capital

187,656



178,143


Treasury stock

(155,947)



(122,201)


Retained earnings

118,275



100,978


Accumulated other comprehensive income

903



83


Total stockholders' equity

150,888



157,004


Total liabilities and stockholders' equity

$

278,163



$

229,881


 

TASER INTERNATIONAL, INC.

SELECTED CASH FLOW INFORMATION

(Unaudited)

(in thousands)



Three Months Ended

December 31,


Twelve Months Ended

December 31,


2016


2015


2016


2015









Net income

$

6,341



$

5,104



$

17,297



$

19,933


Depreciation and amortization

914



2,007



3,658



3,291


Stock-based compensation

2,627



2,177



9,369



7,263


Net cash provided  by (used in) operating activities

(4,034)



16,131



17,925



46,445


Net cash used in investing activities

(5,330)



(2,716)



(3,045)



(36,009)


Net cash provided  by (used in) financing activities

(860)



174



(34,661)



603


Cash and cash equivalents, end of period

40,651



59,526



40,651



59,526



















Three Months Ended

December 31,


Twelve Months Ended

December 31,


2016


2015


2016


2015









Net cash provided by (used in) operating activities

$

(4,034)



$

16,131



$

17,925



$

46,445


Purchases of property and equipment

1,622



2,164



4,957



6,003


Purchases of intangible assets

3,156



99



3,495



501


Purchase of property and equipment and intangible assets in connection with business acquisitions

3,500





3,500



12,599


Free cash flow

$

(12,312)



$

13,868



$

5,973



$

27,342


 

CONTACT: Arvind Bobra
Investor Relations
TASER International, Inc.
[email protected]

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/taser-reports-2016-fourth-quarter-and-full-year-results-300414808.html

SOURCE TASER International, Inc.

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