Segment Data

9 Months Ended

Sep. 30, 2024

Segment Reporting [Abstract]

Segment Data

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 nine months ended September 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 nine months ended September 30, 2023 to conform to the new presentation.

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

	Three Months Ended September 30,
	2024		2023
TASER segment net sales	$	221,734	$	162,570
Software and Sensors segment net sales	322,540		250,708
Total consolidated net sales	$	544,274	$	413,278
TASER adjusted gross margin	$	139,632	$	102,151
Software and Sensors adjusted gross margin	204,258		157,147
Total segment adjusted gross margin	$	343,890	$	259,298
Stock-based compensation expense	10,123		1,687
Amortization of acquired intangible assets	3,020		955
Gross margin	$	330,747	$	256,656
Sales, general and administrative	192,189		122,357
Research and development	114,477		76,880
Interest income, net	10,978		10,458
Other income (loss), net	44,510		3,852
Income (loss) before provision for (benefit from) income taxes	$	79,569	$	71,729

	Nine Months Ended September 30,
	2024		2023
TASER segment net sales	$	597,441	$	452,167
Software and Sensors segment net sales	909,940		678,156
Total consolidated net sales	$	1,507,381	$	1,130,323
TASER adjusted gross margin	$	374,072	$	280,875
Software and Sensors adjusted gross margin	577,992		417,460
Total segment adjusted gross margin	$	952,064	$	698,335
Stock-based compensation expense	48,235		4,685
Amortization of acquired intangible assets	8,298		2,189
Gross margin	$	895,531	$	691,461
Sales, general and administrative	514,228		357,611
Research and development	307,008		219,747
Interest income, net	31,134		29,787
Other income (loss), net	191,510		(42,569)
Income before provision for income taxes	$	296,939	$	101,321