

	Year Ended December 31, 2019						Year Ended December 31, 2018
	TASER		Software and Sensors		Total		TASER		Software and Sensors		Total
TASER 7	$	56,652	$	—	$	56,652	$	7,358	$	—	$	7,358
TASER X26P	52,524		—		52,524		70,638		—		70,638
TASER X2	55,920		—		55,920		78,837		—		78,837
TASER Pulse and Bolt	4,089		—		4,089		5,182		—		5,182
Cartridges	85,987		—		85,987		68,258		—		68,258
Axon Body	—		44,039		44,039		—		21,883		21,883
Axon Flex	—		5,928		5,928		—		6,509		6,509
Axon Fleet	—		16,182		16,182		—		12,527		12,527
Axon Dock	—		20,449		20,449		—		10,706		10,706
Axon Evidence and cloud services	704		130,265		130,969		—		90,291		90,291
TASER Cam	—		3,104		3,104		—		3,871		3,871
Extended warranties	18,074		19,188		37,262		15,753		11,860		27,613
Other	7,711		10,044		17,755		7,089		9,306		16,395
Total	$	281,661	$	249,199	$	530,860	$	253,115	$	166,953	$	420,068



	Year Ended December 31,
	2019				2018				2017 ⁽¹⁾
United States	$	446,100	84.0	%	$	335,310	79.8	%	$	282,810	82.3	%
Other Countries	84,760		16.0		84,758		20.2		60,988		17.7
Total	$	530,860	100.0	%	$	420,068	100.0	%	$	343,798	100.0	%

⁽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.

The timing of revenue recognition may differ from the timing of invoicing to customers. We generally have an unconditional right to consideration when we invoice our customers and record a receivable. We record a contract asset when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing.

Contract assets generally result from our subscription programs where we satisfy a hardware performance obligation upon shipment to the customer, and the right to the portion of the transaction price allocated to that hardware performance obligation is conditional on our future performance of a SaaS service obligation under the contract. We recognize a portion of the amount allocated to hardware products shipped to the customer as accounts receivable when invoiced to the customer, and record the remaining allocated value as a contract asset as we have generally fulfilled our hardware performance obligation upon shipment. Unbilled accounts receivable expected to be invoiced and collected within twelve months was $19.7 million as of December 31, 2019, and was included in accounts and notes receivable, net on our consolidated balance sheet.

Contract liabilities generally consist of deferred revenue on our subscription programs where we generally invoice customers at the beginning of each annual period and record a receivable at the time of invoicing when there is an unconditional right to consideration.

Deferred revenue is comprised mainly of unearned revenue related to our Axon Evidence SaaS platform, secure cloud-based storage, service-type extended warranties, stand-ready obligations in our cartridge programs, and rights to future CED, camera and related accessories hardware in our subscription programs. Revenue for Axon Evidence and cloud-based storage, our service-type extended warranties and stand-ready cartridge programs is generally recognized on a straight-line basis over the subscription term. Revenue for the rights to future hardware is generally recognized at the point in time the hardware products are shipped to the customer.



	December 31, 2019
Contract assets, net	$	47,746
Contract liabilities (deferred revenue)	205,800
Revenue recognized in the period from:
Amounts included in contract liabilities at the beginning of the period	101,768



	December 31, 2019						December 31, 2018
	Current		Long-Term		Total		Current		Long-Term		Total
Warranty:
TASER	$	12,716	$	16,378	$	29,094	$	12,797	$	16,847	$	29,644
Software and Sensors	9,852		5,156		15,008		8,273		6,516		14,789
	22,568		21,534		44,102		21,070		23,363		44,433
Hardware:
TASER	9,569		15,468		25,037		9,355		15,598		24,953
Software and Sensors	22,235		33,759		55,994		20,878		24,685		45,563
	31,804		49,227		81,031		30,233		40,283		70,516
Services:
TASER	293		765		1,058		—		—		—
Software and Sensors	63,199		16,410		79,609		55,713		10,771		66,484
	$	63,492	$	17,175	$	80,667	$	55,713	$	10,771	$	66,484
Total	$	117,864	$	87,936	$	205,800	$	107,016	$	74,417	$	181,433



	December 31, 2019						December 31, 2018
	Current		Long-Term		Total		Current		Long-Term		Total
TASER	$	22,578	$	32,611	$	55,189	$	22,152	$	32,445	$	54,597
Software and Sensors	95,286		55,325		150,611		84,864		41,972		126,836
Total	$	117,864	$	87,936	$	205,800	$	107,016	$	74,417	$	181,433

As of December 31, 2019, we had approximately $1.23 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 December 31, 2019. We expect to recognize between 20% - 25% of this balance over the next twelve months, and 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.

We recognize an asset for the incremental costs of obtaining a contract with a customer, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract and amortized consistent with the recognition timing of the revenue for the underlying performance obligations.

For contract costs related to performance obligations with an amortization period of one year or less, we apply the practical expedient to expense these sales commissions when incurred. These costs are recognized as incurred within sales, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive income.

During the years ended December 31, 2019 and 2018, we recognized $8.2 million and $5.3 million, respectively, of amortization related to deferred commissions. These costs are recorded within sales, general and administrative expenses on the accompanying consolidated statements of operations and comprehensive income.

Our contracts with certain municipal government customers may be subject to budget appropriation, other contract cancellation clauses or future periods which are optional. In contracts where the customer’s performance is subject to budget appropriation clauses, we generally consider the likelihood of non-appropriation to be remote when determining the contract term and transaction price. Contracts with other cancellation provisions or optional periods may require judgment in determining the contract term, including the existence of material rights, transaction price and identifying the performance obligations.

At times, customers may request changes that either amend, replace or cancel existing contracts. Judgment is required to determine whether the specific facts and circumstances within the contracts require the changes to be accounted for as a separate contract or as a modification. Generally, contract modifications containing additional goods and services that are determined to be distinct and sold at their SSP are accounted for as a separate contract. For contract modifications where both criteria are not met, the original contract is updated and the required adjustments to revenue and contract assets, liabilities, and other accounts will be made accordingly.

Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately rather than together may require significant judgment. We consider CED devices and related accessories, as well as cameras and related accessories, to be separately identifiable from each other as well as from extended warranties on these products and the SaaS subscriptions to Axon Evidence and other cloud services.

In contracts where there are timing differences between when we transfer a promised good or service to the customer and when the customer pays for that good or service, we have determined that, with the exception of our TASER 60 installment purchase arrangements, our contracts generally do not include a significant financing component. For the year ended December 31, 2019, we recorded revenue of $39.3 million, including $1.6 million of interest income, under our TASER 60 plan. For the year ended December 31, 2018, we recorded revenue of $48.2 million including $1.3 million of interest income under our TASER 60 plan. For the year ended December 31, 2017, we recorded revenue of $40.7 million including $0.7 million of interest income under our TASER 60 plan. Amounts for the year ended December 31, 2017 have not been adjusted under the modified retrospective method of adoption of Topic 606.

Judgment is required to determine the SSP for each distinct performance obligation.We analyze separate sales of our products and services as a basis for estimating the SSP of our products and services and then use that SSP as the basis for allocating the transaction price when our products and services are sold together in a contract with multiple performance obligations. In instances where the SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions, time value of money and other observable inputs. We typically have more than one SSP for individual products and services due to the

stratification of those products and services by customers and circumstances. In these instances, we may use information such as geographic region and distribution channel in determining the SSP.