Segment Data

6 Months Ended

Jun. 30, 2024

Segment Data

Segment Data

Note 16 - Segment Data

Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the “Software and Sensors” segment); and the manufacture and sale of our CEDs, batteries, accessories, extended warranties and other products and services (collectively, the “TASER” 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.”

Reportable segments are determined based on discrete financial information reviewed by our Chief Executive Officer, who is our chief operating decision maker (“CODM”). We organize and review operations based on products and services, and currently there are no operating segments that are aggregated. We perform an analysis of our reportable segments at least annually.

During the six months ended June 30, 2024, the segment measure of profit and loss used by the CODM was changed from gross margin to adjusted gross margin, defined as gross margin before stock-based compensation expense and amortization of acquired intangible assets. This change in segment measure allows the CODM to better assess operating results over time and is consistent with how the CODM evaluates our businesses. Accordingly, we have updated our segment disclosure for the three and six months ended June 30, 2023 to conform to the new presentation.

Information relative to our reportable segments was as follows (in thousands):

	Three Months Ended June 30,
	2024		2023
TASER segment net sales	$	196,958	$	154,410
Software and Sensors segment net sales		307,141		220,195
Total consolidated net sales	$	504,099	$	374,605
TASER adjusted gross margin	$	123,983	$	93,989
Software and Sensors adjusted gross margin		191,245		139,810
Consolidated adjusted gross margin	$	315,228	$	233,799
Stock-based compensation expense		8,517		1,678
Amortization of acquired intangible assets		2,976		—
Gross margin	$	303,735	$	232,121
Sales, general and administrative		169,427		119,922
Research and development		101,434		71,940
Interest income, net		9,782		9,663
Other income (loss), net		7,934		(62,031)
Income (loss) before provision for (benefit from) income taxes	$	50,590	$	(12,109)

	Six Months Ended June 30,
	2024		2023
TASER segment net sales	$	375,706	$	288,692
Software and Sensors segment net sales		589,129		428,956
Total consolidated net sales	$	964,835	$	717,648
TASER adjusted gross margin	$	234,454	$	177,818
Software and Sensors adjusted gross margin		372,101		261,403
Consolidated adjusted gross margin	$	606,555	$	439,221
Stock-based compensation expense		38,112		2,998
Amortization of acquired intangible assets		4,662		—
Gross margin	$	563,781	$	436,223
Sales, general and administrative		322,096		236,489
Research and development		192,531		142,867
Interest income, net		20,156		19,329
Other income (loss), net		147,000		(46,421)
Income before provision for income taxes	$	216,310	$	29,775