Segment Data

12 Months Ended

Dec. 31, 2019

Our operations are comprised of two reportable segments: the manufacture and sale of CEDs, 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, and services (collectively, the “Software and Sensors” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as "Axon Cloud revenue." 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):



	For the year ended December 31, 2019
	TASER		Software and Sensors		Total
Net sales from products	$	280,554	$	118,920	$	399,474
Net sales from services	1,107		130,279		131,386
Net sales	281,661		249,199		530,860
Cost of product sales	107,188		83,495		190,683
Cost of service sales	—		32,891		32,891
Cost of sales	107,188		116,386		223,574
Gross margin	$	174,473	$	132,813	$	307,286

Research and development	$	14,469	$	86,252	$	100,721



	For the year ended December 31, 2018
	TASER		Software and Sensors		Total
Net sales from products	$	253,115	$	74,520	$	327,635
Net sales from services	—		92,433		92,433
Net sales	253,115		166,953		420,068
Cost of product sales	80,354		58,983		139,337
Cost of service sales	—		22,148		22,148
Cost of sales	80,354		81,131		161,485
Gross margin	$	172,761	$	85,822	$	258,583

Research and development	$	17,012	$	59,844	$	76,856



	For the year ended December 31, 2017
	TASER		Software and Sensors		Total
Net sales from products ⁽¹⁾	$	234,512	$	51,347	$	285,859
Net sales from services⁽¹⁾	—		57,939		57,939
Net sales ⁽¹⁾	234,512		109,286		343,798
Cost of product sales	72,054		45,943		117,997
Cost of service sales	—		18,713		18,713
Cost of sales	72,054		64,656		136,710
Gross margin	$	162,458	$	44,630	$	207,088

Research and development	$	8,377	$	46,996	$	55,373

⁽¹⁾ Amounts for the year ended December 31, 2017 have not been adjusted under the modified retrospective method of adoption of Topic 606, and are presented consistent with the prior period amounts reported under ASC 605.