Axon Enterprise (AXON) 10-Q7 Nov 232023 Q3 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2023	Nov. 03, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-16391
Entity Registrant Name	Axon Enterprise, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	86-0741227
Entity Address, Address Line One	17800 North 85th Street
Entity Address, City or Town	Scottsdale
Entity Address, State or Province	AZ
Entity Address, Postal Zip Code	85255
City Area Code	480
Local Phone Number	991-0797
Title of 12(b) Security	Common Stock, $0.00001 Par Value
Trading Symbol	AXON
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		74,933,831
Entity Central Index Key	0001069183
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 406,042	$ 353,684
Marketable securities	68,850	39,240
Short-term investments	715,688	581,769
Accounts and notes receivable, net of allowance of $2,144 and $2,176 as of September 30, 2023 and December 31, 2022, respectively	442,830	358,190
Contract assets, net	260,523	196,902
Inventory	260,119	202,471
Prepaid expenses and other current assets	103,789	73,022
Total current assets	2,257,841	1,805,278
Property and equipment, net	186,957	169,843
Deferred tax assets, net	213,831	156,866
Intangible assets, net	20,324	12,158
Goodwill	57,344	44,983
Long-term investments		156,207
Long-term notes receivable, net	4,381	5,210
Long-term contract assets, net	78,663	45,170
Strategic investments	240,299	296,563
Other long-term assets	194,543	159,616
Total assets	3,254,183	2,851,894
Current liabilities:
Accounts payable	90,035	59,918
Accrued liabilities	146,940	155,934
Current portion of deferred revenue	454,891	360,037
Customer deposits	16,469	20,399
Other current liabilities	9,492	6,358
Total current liabilities	717,827	602,646
Deferred revenue, net of current portion	270,082	248,003
Liability for unrecognized tax benefits	18,938	10,745
Long-term deferred compensation	9,148	6,285
Deferred tax liability, net	2,467	1
Long-term lease liabilities	35,329	37,143
Convertible notes, net	676,315	673,967
Other long-term liabilities	2,960	4,613
Total liabilities	1,733,066	1,583,403
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
Common stock, $0.00001 par value; 200,000,000 shares authorized; 74,931,697 and 71,474,581 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	1	1
Additional paid-in capital	1,315,954	1,174,594
Treasury stock at cost, 20,220,227 shares as of September 30, 2023 and December 31, 2022	(155,947)	(155,947)
Retained earnings	373,978	257,022
Accumulated other comprehensive loss	(12,869)	(7,179)
Total stockholders' equity	1,521,117	1,268,491
Total liabilities and stockholders' equity	$ 3,254,183	$ 2,851,894

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance on accounts receivable	$ 2,144	$ 2,176
Preferred stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Preferred stock, shares authorized (in shares)	25,000,000	25,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.00001	$ 0.00001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	74,931,697	71,474,581
Common stock, shares outstanding (in shares)	74,931,697	71,474,581
Treasury stock, shares (in shares)	20,220,227	20,220,227

UNAUDITED CONDENSED CONSOLIDATE

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net sales	$ 413,601	$ 311,754	$ 1,131,249	$ 853,793
Cost of sales	158,329	118,497	439,754	330,834
Gross margin	255,272	193,257	691,495	522,959
Operating expenses:
Sales, general and administrative	123,279	102,023	359,768	287,157
Research and development	76,880	59,127	219,747	165,090
Total operating expenses	200,159	161,150	579,515	452,247
Income from operations	55,113	32,107	111,980	70,712
Interest and other income (loss), net	14,310	(11,249)	(12,782)	91,076
Income before provision for income taxes	69,423	20,858	99,198	161,788
Provision for (benefit from) income taxes	10,026	8,727	(17,758)	43,824
Net income	$ 59,397	$ 12,131	$ 116,956	$ 117,964
Net income per common and common equivalent shares:
Basic (in dollars per share)	$ 0.79	$ 0.17	$ 1.58	$ 1.66
Diluted (in dollars per share)	$ 0.78	$ 0.17	$ 1.56	$ 1.63
Weighted average number of common and common equivalent shares outstanding:
Basic (in shares)	74,826	71,107	73,904	71,033
Diluted (in shares)	75,952	72,525	75,212	72,386
Net income	$ 59,397	$ 12,131	$ 116,956	$ 117,964
Foreign currency translation adjustments	(6,799)	(2,275)	(5,680)	(5,513)
Unrealized gain (loss) on available-for-sale investments	656	(326)	(10)	(976)
Comprehensive income	53,254	9,530	111,266	111,475
Product
Net sales	256,443	210,398	709,306	586,653
Cost of sales	116,278	93,724	325,054	260,578
Service
Net sales	157,158	101,356	421,943	267,140
Cost of sales	$ 42,051	$ 24,773	$ 114,700	$ 70,256

UNAUDITED CONDENSED CONSOLIDA_2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Beginning balance at Dec. 31, 2021	$ 1	$ 1,095,229	$ (155,947)	$ 109,883	$ (1,317)	$ 1,047,849
Beginning balance (in shares) at Dec. 31, 2021	70,896,856		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		(70)				(70)
Issuance of common stock under employee plans, net		(1,388)				(1,388)
Issuance of common stock under employee plans, net (in shares)	99,802
Stock-based compensation		25,088				25,088
Net income				54,871		54,871
Other comprehensive income (loss), net					(1,561)	(1,561)
Ending balance at Mar. 31, 2022	$ 1	1,118,859	$ (155,947)	164,754	(2,878)	1,124,789
Ending balance (in shares) at Mar. 31, 2022	70,996,658		20,220,227
Beginning balance at Dec. 31, 2021	$ 1	1,095,229	$ (155,947)	109,883	(1,317)	1,047,849
Beginning balance (in shares) at Dec. 31, 2021	70,896,856		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income						117,964
Ending balance at Sep. 30, 2022	$ 1	1,167,218	$ (155,947)	227,847	(7,806)	1,231,313
Ending balance (in shares) at Sep. 30, 2022	71,151,670		20,220,227
Beginning balance at Mar. 31, 2022	$ 1	1,118,859	$ (155,947)	164,754	(2,878)	1,124,789
Beginning balance (in shares) at Mar. 31, 2022	70,996,658		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		(4)				(4)
Issuance of common stock under employee plans, net		(931)				(931)
Issuance of common stock under employee plans, net (in shares)	81,041
Stock-based compensation		21,162				21,162
Net income				50,962		50,962
Other comprehensive income (loss), net					(2,327)	(2,327)
Ending balance at Jun. 30, 2022	$ 1	1,139,086	$ (155,947)	215,716	(5,205)	1,193,651
Ending balance (in shares) at Jun. 30, 2022	71,077,699		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock under employee plans, net		(72)				(72)
Issuance of common stock under employee plans, net (in shares)	73,971
Stock-based compensation		28,204				28,204
Net income				12,131		12,131
Other comprehensive income (loss), net					(2,601)	(2,601)
Ending balance at Sep. 30, 2022	$ 1	1,167,218	$ (155,947)	227,847	(7,806)	1,231,313
Ending balance (in shares) at Sep. 30, 2022	71,151,670		20,220,227
Beginning balance at Dec. 31, 2022	$ 1	1,174,594	$ (155,947)	257,022	(7,179)	1,268,491
Beginning balance (in shares) at Dec. 31, 2022	71,474,581		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		33,650				33,650
Issuance of common stock (in shares)	154,500
Issuance of common stock under employee plans, net		(34,841)				(34,841)
Issuance of common stock under employee plans, net (in shares)	335,629
Stock options exercised		54,346				54,346
Stock options exercised (in shares)	1,901,535
Stock-based compensation		34,350				34,350
Issuance of common stock for business combination contingent consideration (in shares)	7,817
Net income				45,139		45,139
Other comprehensive income (loss), net					1,860	1,860
Ending balance at Mar. 31, 2023	$ 1	1,262,099	$ (155,947)	302,161	(5,319)	1,402,995
Ending balance (in shares) at Mar. 31, 2023	73,874,062		20,220,227
Beginning balance at Dec. 31, 2022	$ 1	1,174,594	$ (155,947)	257,022	(7,179)	1,268,491
Beginning balance (in shares) at Dec. 31, 2022	71,474,581		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income						116,956
Ending balance at Sep. 30, 2023	$ 1	1,315,954	$ (155,947)	373,978	(12,869)	1,521,117
Ending balance (in shares) at Sep. 30, 2023	74,931,697		20,220,227
Beginning balance at Mar. 31, 2023	$ 1	1,262,099	$ (155,947)	302,161	(5,319)	1,402,995
Beginning balance (in shares) at Mar. 31, 2023	73,874,062		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		61,156				61,156
Issuance of common stock (in shares)	313,094
Issuance of common stock under employee plans, net		(62,214)				(62,214)
Issuance of common stock under employee plans, net (in shares)	570,357
Stock options exercised		157				157
Stock options exercised (in shares)	5,491
Stock-based compensation		31,891				31,891
Net income				12,420		12,420
Other comprehensive income (loss), net					(1,407)	(1,407)
Ending balance at Jun. 30, 2023	$ 1	1,293,089	$ (155,947)	314,581	(6,726)	1,444,998
Ending balance (in shares) at Jun. 30, 2023	74,763,004		20,220,227
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock		(101)				(101)
Issuance of common stock under employee plans, net		(7,021)				(7,021)
Issuance of common stock under employee plans, net (in shares)	168,693
Stock-based compensation		29,987				29,987
Net income				59,397		59,397
Other comprehensive income (loss), net					(6,143)	(6,143)
Ending balance at Sep. 30, 2023	$ 1	$ 1,315,954	$ (155,947)	$ 373,978	$ (12,869)	$ 1,521,117
Ending balance (in shares) at Sep. 30, 2023	74,931,697		20,220,227

UNAUDITED CONDENSED CONSOLIDA_3

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net income	$ 116,956	$ 117,964
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	96,228	74,454
Deferred income taxes	(53,311)	30,349
Unrealized loss (gain) on strategic investments and marketable securities, net	42,306	(92,498)
Depreciation and amortization	22,587	18,171
Bond amortization	(12,071)	(61)
Noncash lease expense	4,890	4,997
Unrecognized tax benefits	4,302	3,519
Amortization of debt issuance cost	2,328
Coupon interest expense	1,073
Other noncash items	(1,140)	2,659
Change in assets and liabilities:
Accounts and notes receivable and contract assets	(182,468)	(115,046)
Inventory	(59,564)	(66,267)
Prepaid expenses and other assets	(64,608)	(17,871)
Accounts payable, accrued and other liabilities	13,423	28,684
Deferred revenue	118,294	115,187
Net cash provided by operating activities	49,225	104,241
Cash flows from investing activities:
Purchases of investments	(426,993)	(194,142)
Proceeds from call, maturity, and sale of investments	461,214	15,485
Exercise of warrants of strategic investments		(6,555)
Purchases of property and equipment	(35,624)	(44,218)
Proceeds from disposal of property and equipment	67	226
Purchases of intangible assets	(579)	(193)
Strategic investments	(17,692)	(70,500)
Business acquisition, net of cash acquired	(21,090)	(2,104)
Net cash used in investing activities	(40,697)	(302,001)
Cash flows from financing activities:
Net proceeds from equity offering	94,705	(74)
Proceeds from options exercised	54,503
Income and payroll tax payments for net-settled stock awards	(104,076)	(2,391)
Net cash provided by (used in) financing activities	45,132	(2,465)
Effect of exchange rate changes on cash and cash equivalents	(1,201)	(6,783)
Net increase (decrease) in cash and cash equivalents	52,459	(207,008)
Cash and cash equivalents and restricted cash, beginning of period	355,552	356,438
Cash and cash equivalents and restricted cash, end of period	$ 408,011	$ 149,430

UNAUDITED CONDENSED CONSOLIDA_4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Supplemental disclosures:
Cash and cash equivalents	$ 406,042	$ 147,711
Restricted cash (Note 1)	1,969	1,719
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	408,011	149,430
Cash paid for income taxes, net of refunds	47,689	7,503
Non-cash transactions
Property and equipment purchases in accounts payable and accrued liabilities	$ 1,784	$ 1,244

Organization and Summary of Sig

Organization and Summary of Significant Accounting Policies	9 Months Ended
Organization and Summary of Significant Accounting Policies	Sep. 30, 2023
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies	Note 1 - Organization and Summary of Significant Accounting Policies Axon Enterprise, Inc. (“Axon”, the “Company”, “we”, or “us”) is a market-leading provider of law enforcement technology solutions. Our mission is to protect life in service of promoting peace, justice and strong institutions. Our headquarters in Scottsdale, Arizona houses our executive management, sales, marketing, certain engineering, manufacturing, finance and other administrative support functions. Our global software hub is located in Seattle, Washington, and we also have subsidiaries and / or offices located in Australia, Belgium, Canada, Finland, France, Germany, Hong Kong, India, Italy, the Netherlands, Spain, the United Kingdom, and Vietnam. The accompanying unaudited condensed consolidated financial statements include the accounts of Axon Enterprise, Inc. and our subsidiaries. All material intercompany accounts, transactions, and profits have been eliminated. Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2022, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit losses, ● valuation of goodwill, intangible and long-lived assets, ● valuation of strategic investments, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, and ● recognition and measurement of contingencies and accrued litigation expense. The Company believes that estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from those estimates. Segment Information 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 conducted electrical devices (“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. 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. Additional information related to our business segments is summarized in Note 15. Geographic Information and Major Customers / Suppliers For the three and nine months ended September 30, 2023, no individual country outside the United States represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three and nine months ended September 30, 2023, no customer represented more than 10% of total net sales. At September 30, 2023 and December 31, 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the United States, China, Republic of Korea, Malaysia, Mexico, Sri Lanka, Taiwan, and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have previously experienced supply chain disruptions relating to materials and port constraints, we continue to manage potential logistical interruptions. We remain focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers. Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock options and unvested restricted stock units (“RSUs”). The effects of outstanding stock options, unvested RSUs, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 59,397 $ 12,131 $ 116,956 $ 117,964 Denominator: Weighted average shares outstanding 74,826 71,107 73,904 71,033 Dilutive effect of stock-based awards 1,126 1,418 1,308 1,353 Diluted weighted average shares outstanding 75,952 72,525 75,212 72,386 Net income per common share: Basic $ 0.79 $ 0.17 $ 1.58 $ 1.66 Diluted $ 0.78 $ 0.17 $ 1.56 $ 1.63 Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock-based awards 481 2,977 470 2,952 2027 Notes 3,017 — 3,017 — 2027 Warrants 3,017 — 3,017 — Total potentially dilutive securities 6,515 2,977 6,504 2,952 For additional information regarding our 2027 Notes, refer to Note 9. Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (901) (1,988) Warranty expense 3,381 161 Balance, end of period $ 3,291 $ 995 Fair Value Measurements and Financial Instruments We use the fair value framework that prioritizes the inputs to valuation techniques for measuring financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: ● Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. ● Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. ● Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about inputs that market participants would use in pricing an asset or liability. We have cash equivalents and investments, which at September 30, 2023 comprised money market funds, commercial paper, corporate bonds, term deposits, U.S. government bonds, agency bonds, U.S. Treasury bills, and U.S. Treasury Inflation-Protected Securities Cash equivalents and investments at December 31, 2022 also included municipal bonds and certificates of deposit . We have an investment in marketable securities, for which c hanges in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income (loss), net. We have strategic investments in eight unconsolidated affiliates as of September 30, 2023. The estimated fair value of the investments was determined based on Level 3 inputs. In determining the estimated fair value of our strategic investments in privately held companies, we utilize observable data available to us as discussed further in Note 6. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at September 30, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the condensed consolidated balance sheet. Restricted Cash Restricted cash balance as of September 30, 2023 was $2.0 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.9 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder was $1.9 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder in other long-term assets. Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and changes in circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such events and changes in circumstances could include, but are not limited to, a change in our product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications are not material and had no effect on the reported results of operations.

Revenues

Revenues	9 Months Ended
Revenues	Sep. 30, 2023
Revenues.
Revenues	Note 2 - Revenues Nature of Products and Services The following tables present our revenues by primary product and service offering (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 86,718 $ — $ 86,718 $ 80,146 $ — $ 80,146 Cartridges 54,279 — 54,279 46,475 — 46,475 Axon Evidence and Cloud Services 8,975 150,563 159,538 5,125 96,814 101,939 Extended Warranties 8,078 16,054 24,132 7,290 14,511 21,801 Axon Body Cameras and Accessories — 52,488 52,488 — 40,944 40,944 Axon Fleet Systems — 26,716 26,716 — 10,139 10,139 Other (1) (2) 4,520 5,210 9,730 5,847 4,463 10,310 Total $ 162,570 $ 251,031 $ 413,601 $ 144,883 $ 166,871 $ 311,754 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 239,165 — $ 239,165 $ 213,623 $ — $ 213,623 Cartridges 149,504 — 149,504 134,145 — 134,145 Axon Evidence and Cloud Services 24,670 400,979 425,649 11,862 258,664 270,526 Extended Warranties 23,463 45,305 68,768 21,428 36,070 57,498 Axon Body Cameras and Accessories — 124,066 124,066 — 113,399 113,399 Axon Fleet Systems — 95,648 95,648 — 39,840 39,840 Other (1) (2) 14,460 13,989 28,449 13,771 10,991 24,762 Total $ 451,262 $ 679,987 $ 1,131,249 $ 394,829 $ 458,964 853,793 (1) TASER segment “Other” includes smaller categories, such as Virtual Reality (“VR”) hardware, weapons training revenue such as revenue associated with our Master Instructor School, and TASER consumer device sales. (2) Software and Sensors segment “Other” includes revenue from items including Signal Sidearm, Interview Room and Axon Air. The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 342,090 83 % $ 264,644 85 % $ 954,949 84 % $ 707,304 83 % Other countries 71,511 17 47,110 15 176,300 16 146,489 17 Total $ 413,601 100 % $ 311,754 100 % $ 1,131,249 100 % $ 853,793 100 % Contract Balances The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the nine months ended September 30, 2023 (in thousands): September 30, 2023 Contract assets, net $ 339,186 Contract liabilities (deferred revenue) 724,973 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 279,223 Contract liabilities (deferred revenue) consisted of the following (in thousands): September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Extended Warranty: TASER $ 12,500 $ 16,748 $ 29,248 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 31,569 18,524 50,093 26,229 15,338 41,567 44,069 35,272 79,341 40,436 32,956 73,392 Hardware: TASER 28,908 29,056 57,964 49,361 12,640 62,001 Software and Sensors 77,207 109,573 186,780 50,426 109,227 159,653 106,115 138,629 244,744 99,787 121,867 221,654 Services: TASER 11,104 6,549 17,653 7,637 9,501 17,138 Software and Sensors 293,603 89,632 383,235 212,177 83,679 295,856 304,707 96,181 400,888 219,814 93,180 312,994 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040 September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 52,512 $ 52,353 $ 104,865 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 402,379 217,729 620,108 288,832 208,244 497,076 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040 Remaining Performance Obligations As of September 30, 2023, we had approximately $5.8 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 Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, as of September 30, 2023. We expect to recognize between 15% - 25% of this balance over the next 12 months, and generally expect the remainder to be recognized over the following ten years, subject to risks related to delayed deployments, budget appropriation or other contract cancellation clauses.

Cash, Cash Equivalents and Inve

Cash, Cash Equivalents and Investments	9 Months Ended
Cash, Cash Equivalents and Investments	Sep. 30, 2023
Cash, Cash Equivalents and Investments
Cash, Cash Equivalents and Investments	Note 3 - Cash, Cash Equivalents and Investments The following tables summarize our cash, cash equivalents, marketable securities, and available-for-sale investments at September 30, 2023 and December 31, 2022 (in thousands): As of September 30, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 224,437 $ — $ — $ 224,437 $ 224,437 $ — $ — $ — Level 1: Money market funds 25,292 — — 25,292 25,292 — — — Agency bonds 170,838 17 (347) 170,508 33,500 — 137,008 — Treasury bills 133,779 20 — 133,799 122,813 — 10,986 — Marketable securities 90,000 — (21,150) 68,850 — 68,850 — — Subtotal 419,909 37 (21,497) 398,449 181,605 68,850 147,994 — Level 2: Term deposits 203,205 — — 203,205 — — 203,205 — Corporate bonds 121,071 8 (559) 120,520 — — 120,520 — U.S. government 176,371 — (700) 175,671 — — 175,671 — Treasury Inflation-Protected Securities 2,606 — (11) 2,595 — — 2,595 — Commercial paper 65,703 — — 65,703 — — 65,703 — Subtotal 568,956 8 (1,270) 567,694 — — 567,694 — Total $ 1,213,302 $ 45 $ (22,767) $ 1,190,580 $ 406,042 $ 68,850 $ 715,688 $ — As of September 30, 2023, we had $390.4 million of available-for-sale investments with unrealized losses. Of the $390.4 million of available-for-sale investments with unrealized losses, $27.0 million has been in a continuous unrealized loss position for twelve months or longer, with total gross unrealized losses of $0.3 million. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. During the year ended December 31, 2021, we acquired 9.0 million shares of common stock of Cellebrite DI Ltd (“CLBT”) with a fair value of $90.0 million. The CLBT common stock is recorded as marketable securities in the accompanying condensed consolidated balance sheets and its fair value is adjusted every reporting period. Changes in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income (loss), net. During the three and nine months ended September 30, 2023, we recorded an unrealized gain on marketable securities of $4.1 million and $29.6 million, respectively, relating to CLBT. As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. government 30,525 — (159) 30,366 — — 30,366 — Treasury Inflation-Protected Securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207

Expected Credit Losses

Expected Credit Losses	9 Months Ended
Expected Credit Losses	Sep. 30, 2023
Expected Credit Losses
Expected Credit Losses	Note 4 - Expected Credit Losses We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts receivable, contract assets, notes receivable, and off-balance-sheet exposures is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the current status of customers’ trade accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Our monitoring activities include account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. The following table provides a roll-forward of the allowance for expected credit losses for finance receivables and off-balance-sheet exposures. The expected credit losses for receivables is deducted from the amortized cost basis of accounts receivable, contract assets, and notes receivable to present the net amount expected to be collected (in thousands): Nine Months Ended September 30, 2023 United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 Provision for expected credit losses 733 146 879 Amounts written off charged against the allowance (719) (105) (824) Other, including foreign currency translation — 8 8 Balance, end of period (1) $ 3,078 $ 615 $ 3,693 (1) Ending balance includes allowance for credit losses recorded in Other current liabilities on the Consolidated Balance Sheet which is related to off-balance-sheet credit exposurse. September 30, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,144 $ 2,176 Contract assets, net 1,476 1,360 Long-term notes receivable, net of current portion 59 94 Other current liabilities 14 — Total allowance for expected credit losses on customer receivables $ 3,693 $ 3,630

Inventory

Inventory	9 Months Ended
Inventory	Sep. 30, 2023
Inventory
Inventory	Note 5 - Inventory Inventories are stated at the lower of cost, determined on the first-in, first-out (“FIFO”) basis, or net realizable value, net of an inventory valuation allowance. We use a standard cost methodology to determine the cost basis for our inventories. Costs include allocations for materials, labor, and overhead. All variances between actual costs and standard costs are apportioned to inventory and cost of goods sold based upon inventory turnover. We evaluate inventory on a quarterly basis for obsolete or slow-moving items to ascertain if the recorded allowance is reasonable and adequate. Additional provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. Inventory consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Raw materials $ 104,372 $ 72,740 Finished goods 155,747 129,731 Total inventory $ 260,119 $ 202,471

Strategic Investments

Strategic Investments	9 Months Ended
Strategic Investments	Sep. 30, 2023
Strategic Investments
Strategic Investments	Note 6 - Strategic Investments Strategic investments include investments in a number of non-public technology-driven companies. We account for strategic investments under the ASC 321 measurement alternative for equity securities without readily determinable fair values, as there are no quoted market prices for the investments. The investments are measured at cost less impairment, adjusted for observable price changes and are assessed for impairment whenever events or changes in circumstances indicate that the fair value may be less than its carrying value. In conjunction with certain of our strategic investments, we have the ability to commit additional capital over time through warrants and call options; for some investments, the exercisability and exercise prices are conditional on the achievement of certain performance metrics. The following tables provide a roll-forward of the balance of strategic investments (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 215,945 $ 459 $ 17,233 $ 233,637 $ 264,156 $ 1,195 16,340 $ 281,691 Investments 4,099 1,176 — 5,275 8,004 459 893 9,356 Fair value adjustments: Unrealized losses and impairments — (113) — (113) (718) — — (718) Exercises 1,500 — — 1,500 — — — — Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 — $ 83,520 Investments 15,016 1,176 — 16,192 53,164 459 17,233 70,856 Fair value adjustments: Unrealized gains — — — — 41,893 28,539 — 70,432 Unrealized losses and impairments (72,648) (1,308) — (73,956) (1,109) — — (1,109) Exercises 1,500 — — 1,500 96,719 (30,089) — 66,630 Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Inception to date Strategic investments Warrants Call options Total Investments $ 124,498 $ 4,222 $ 17,233 $ 145,953 Fair value adjustments: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses and impairments (73,756) (1,684) — (75,440) Exercises 98,219 (30,089) — 68,130 Sales (14,546) — — (14,546) Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 An unrealized impairment loss of $73.8 million related to our strategic investment and related warrants was recorded in interest and other income (loss), net on our condensed consolidated statement of operations during the nine months ended September 30, 2023.

Variable Interest Entities

Variable Interest Entities	9 Months Ended
Variable Interest Entities	Sep. 30, 2023
Variable Interest Entities
Variable Interest Entities	Note 7 - Variable Interest Entities We evaluate our investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If we conclude that an investee is a VIE, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a VIE, we consolidate such entity and reflect the non-controlling interest of other beneficiaries of that entity. ● The VIE’s purpose, design, and risks the VIE was designed to create and pass through to its variable interest holders; ● The VIE’s capital structure; ● The terms between the VIE and its variable interest holders and other parties involved with the VIE; and ● Related-party affiliations. The table below presents a summary of the unconsolidated VIEs in which we hold variable interests: September 30, 2023 December 31, 2022 Total unconsolidated variable interest entities: Carrying value of variable interest - assets $ 13,016 $ 11,530 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 13,016 11,530 Total $ 13,016 $ 11,530 (1) In the table above: ● The nature of our variable interest is described in the row under maximum exposure to loss. ● Our exposure to the obligations of the VIE is limited to our interest in the entity. The primary purpose of our U.S-based, unconsolidated VIE investments is to create strategic partnerships with market-leading providers of law enforcement technology solutions. We present all variable interests in unconsolidated VIEs as strategic investments within the long-term assets section of the condensed consolidated balance sheet. We have provided financial support to the unconsolidated VIEs in exchange for preferred equity as well as warrants and call options that give us the ability to commit additional capital over time. Financial support provided to the unconsolidated VIEs is used to continue to finance their operations. We have no explicit or implicit arrangements to provide additional financial support to the VIEs and we have no liabilities to the VIEs as of September 30, 2023 and December 31, 2022.

Accrued Liabilities

Accrued Liabilities	9 Months Ended
Accrued Liabilities	Sep. 30, 2023
Accrued Liabilities
Accrued Liabilities	Note 8 - Accrued Liabilities September 30, 2023 December 31, 2022 Accrued salaries, commissions, benefits and bonus $ 92,437 $ 97,882 Accrued professional, consulting and lobbying fees 6,102 3,861 Accrued warranty expense 3,291 811 Accrued income and other taxes 3,358 13,559 Accrued inventory in transit 11,847 10,548 Other accrued expenses 29,905 29,273 Accrued liabilities $ 146,940 $ 155,934

Convertible Senior Notes

Convertible Senior Notes	9 Months Ended
Convertible Senior Notes	Sep. 30, 2023
Convertible Senior Notes
Convertible Senior Notes	Note 9 – Convertible Senior Notes 2027 Notes September 30, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (13,685) (16,033) Convertible notes carrying amount, net $ 676,315 $ 673,967 September 30, 2023 December 31, 2022 2027 Notes $ 738.4 $ 687.3 Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Contractual interest expense $ 863 $ 2,588 Amortization of debt issuance costs 797 2,328 Total interest expense $ 1,660 $ 4,916 Note Hedge Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680 dilution upon conversion of the Notes in the event that the fair value per share of our common stock at the time of exercise is greater than the conversion price of the Notes. The Note Hedge is a separate transaction and is not part of the terms of the Notes. Holders of the Notes do not have any rights with respect to the Note Hedge. The Note Hedge does not impact earnings per share, as it was entered into to offset any dilution from the Notes. As of September 30, 2023, 3,016,680 shares remain subject to the Note Hedge. Note Warrants Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028 Separately, we entered into warrant transactions with certain investment banks, whereby we sold warrants to acquire, subject to adjustment, the number of shares of our common stock shown in the table above. If the average market value per share of our common stock, on each expiration date exceeds the strike price of the Warrants expiring on that day, such Warrants would have a dilutive effect on our earnings per share to the extent we report net income. According to the terms of the Warrants, the Warrants will be automatically exercised over a 60 -trading day period beginning on the first expiration date as set forth above.

Income Taxes

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2023
Income Taxes
Income Taxes	Note 10 - Income Taxes We file income tax returns for federal purposes and in many states, as well as in multiple foreign jurisdictions. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time, generally three to four years, but can be up to ten years in some jurisdictions following the tax year to which these filings relate. Deferred Tax Assets Net deferred income tax assets at September 30, 2023, primarily include R&D capitalization net of amortization, deferred revenue, convertible debt net of amortization, accruals and reserves, and stock-based compensation expense partially offset by accelerated depreciation expense and valuation allowance reserve. Our total net deferred tax assets at September 30, 2023 were $211.4 million. In preparing our condensed consolidated financial statements, management assesses the likelihood that its deferred tax assets will be realized from future taxable income. In evaluating our ability to recover our deferred income tax assets, management considers all available positive and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction by jurisdiction basis. A valuation allowance is established if it is determined that it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Management exercises significant judgment in determining our provisions for income taxes, our deferred tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred tax assets. As of September 30, 2023, management continues to believe the positive evidence from projected future earnings outweighs the negative evidence and a valuation allowance is only needed on specific deferred tax assets. We have concluded that a valuation allowance is necessary against unrealized investment losses as well as transaction costs incurred in connection with certain investments. Additionally, we do have Arizona R&D tax credits expiring unutilized each year; therefore, management has concluded that it is more likely than not that our Arizona R&D deferred tax asset will not be realized, and a valuation allowance has been recorded against this net asset. In Australia, we have determined that sufficient deferred tax liabilities will reverse in order to realize all assets except one long-lived intangible where there is not an expectation that the asset may be realized. Therefore, we continue to recognize a partial valuation allowance for Australia. We complete R&D tax credit studies for each year that an R&D tax credit is claimed for federal and state income tax purposes. Management has made the determination that it is more likely than not that the full benefit of the R&D tax credit will not be sustained on examination and recorded a liability for unrecognized tax benefits of $25.6 million as of September 30, 2023. Should the unrecognized benefit of $25.6 million be recognized, our effective tax rate would be favorably impacted. Approximately $5.5 million of the unrecognized tax benefit associated with R&D credits has been netted against the R&D deferred tax asset. Effective Tax Rate Our overall effective tax rate for the nine months ended September 30, 2023, after discrete period adjustments, was (17.9%). Before discrete adjustments, the estimated annual effective tax rate was 17.4%, which differs from the federal statutory rate, primarily due to the impact of R&D tax credits and a decrease in valuation allowance offset by the executive compensation limitation under Internal Revenue Code (“IRC”) Section 162(m) and an increase in unrecognized tax benefits, on projected pre-tax income for the year. The effective tax rate was favorably impacted by a $36.8 million discrete tax benefit primarily associated with net windfalls related to stock-based compensation for RSUs and performance stock units (“PSUs”) that vested during the nine months ended September 30, 2023, primarily attributed to the vesting of the final three tranches of eXponential Stock Performance Plan (“XSPP”) in March and May 2023.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
Stockholders' Equity	Sep. 30, 2023
Stockholders' Equity
Stockholders' Equity	Note 11 - Stockholders’ Equity CEO Performance Award On May 24, 2018, our stockholders approved the Board of Directors’ grant of 6,365,856 stock options to Patrick W. Smith, our Chief Executive Officer (the “CEO Performance Award”). The CEO Performance Award consists of 12 vesting tranches with a vesting schedule based entirely on the attainment of both operational goals (performance conditions) and market capitalization goals (market conditions), assuming continued employment either as the Chief Executive Officer or as both Executive Chairman and Chief Product Officer and service through each attainment date. As of September 30, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee of the Board of Directors (the “Compensation Committee”). As a result, 6.4 million stock options have been certified by the Compensation Committee and vested. As all 12 operational goals have been achieved, we recorded stock-based compensation expense of $246.0 million related to the CEO Performance Award. No stock-based compensation expense was recorded related to the CEO Performance Award for the three months ended September 30, 2023. eXponential Stock Performance Plan On February 12, 2019, our shareholders approved the Axon Enterprise, Inc. 2019 Stock Incentive Plan (the “2019 Plan”), which was adopted by the Board of Directors to reserve a sufficient number of shares to facilitate our XSPP and grants of eXponential Stock Units (“XSUs”) under the 2019 Plan. As of September 30, 2023, all 12 market capitalization and operational goals have been achieved and certified by the Compensation Committee. We recorded stock-based compensation expense of $199.4 million related to the XSU awards from their respective grant dates through September 30, 2023. As of September 30, 2023, we had $0.5 million of total unrecognized stock-based compensation expense, which will be recognized over a weighted-average period of 0.2 years. The unrecognized expense is related to certain awards that have not yet vested due to their minimum service requirement. Restricted Stock Units The following table summarizes RSU activity for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,565 $ 145.38 Granted 464 203.71 Released (371) 118.04 Forfeited (104) 155.25 Units outstanding, end of period 1,554 168.67 $ 309,283 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $198.99 per share, multiplied by the number of RSUs outstanding. As of September 30, 2023, there was $193.8 million in unrecognized compensation costs related to RSUs under our stock plans for awards that are expected to vest. We expect to recognize the cost related to the RSUs over a weighted average period of 2.1 years. RSUs are released when vesting requirements are met. Certain RSUs that vested in the nine months ended September 30, 2023 were net-share settled such that we withheld shares to cover the employees’ tax obligations for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to RSUs were approximately 17,000 and had a value of $3.3 million on their respective vesting dates as determined by the closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the condensed consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital. Performance Stock Units The following table summarizes PSU activity, inclusive of XSUs, for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,369 $ 43.43 Granted 171 187.74 Released (1,222) 36.60 Forfeited (43) 27.52 Units outstanding, end of period 275 166.05 $ 54,768 Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $198.99 per share, multiplied by the number of PSUs outstanding. As of September 30, 2023, there was $22.6 million in unrecognized compensation costs related to PSUs under our stock plans for awards that are expected to vest. We expect to recognize the cost related to the PSUs over a weighted average period of 4.8 years. PSUs are released when vesting requirements are met. Certain PSUs that vested in the nine months ended September 30, 2023 were net-share settled such that we withheld shares to cover the employees’ tax obligations for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. Total shares withheld related to PSUs were 0.5 million and had a value of $100.8 million on their respective vesting dates as determined by the closing stock price on such dates. Payments for the employees’ tax obligations are reflected as a financing activity within the condensed consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital. Stock Option Activity The following table summarizes stock option activity for the nine months ended September 30, 2023 (number of options and aggregate intrinsic value in thousands): Weighted Weighted Average Number Average Remaining of Exercise Contractual Aggregate Options Price Life (years) Intrinsic Value Options outstanding, beginning of year 2,438 $ 28.58 Granted — — Exercised (1,907) 28.58 Expired / terminated — — Options outstanding and exercisable, end of period 531 28.58 4.41 $ 90,476 Aggregate intrinsic value represents the difference between the exercise price of the underlying stock options and the closing stock price on the last trading day of the period ended September 30, 2023, which was $198.99. Of the total stock options exercised during the nine months ended September 30, 2023, 0.9 million shares were immediately sold to cover the exercise price and the option holder’s tax obligation for the applicable income and other employment taxes. Stock-based Compensation Expense The following table summarizes the composition of stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of product sales and service sales $ 1,687 $ 1,157 $ 4,685 $ 3,331 Sales, general and administrative expenses 12,886 14,268 43,232 35,860 Research and development expenses 15,414 12,779 48,311 35,263 Total stock-based compensation expense $ 29,987 $ 28,204 $ 96,228 $ 74,454 Stock Incentive Plan In May 2022, our shareholders approved the Axon Enterprise, Inc. 2022 Stock Incentive Plan (the “2022 Plan”) authorizing an additional 2.5 million shares, plus remaining available shares under prior plans, for issuance under the new plan. Combined with our 2019 Plan and other legacy stock incentive plans, there are 2.3 million shares available for grant as of September 30, 2023. Stock Repurchase Plan In February 2016, our Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of our outstanding common stock subject to stock market conditions and corporate considerations. During the nine months ended September 30, 2023 and 2022, no common shares were purchased under the program. As of September 30, 2023, $16.3 million remains available under the plan for future purchases. Any future purchases will be discretionary. At-the-Market equity offering During the nine months ended September 30, 2023, we sold 467,594 shares of our common stock under our “at-the-market” equity offering program (the “ATM”). We generated approximately $96.4 million in aggregate gross proceeds from sales under the ATM. Aggregate net proceeds from the ATM were $94.7 million after deducting related expenses, including commissions to the sales agent and issuance costs of $1.7 million. We may sell up to a total of 3.0 million shares of our common stock under the ATM, with 2.0 million shares remaining as of September 30, 2023

Line of Credit

Line of Credit	9 Months Ended
Line of Credit	Sep. 30, 2023
Line of Credit.
Line of Credit	Note 12 - Line of Credit In December 2022, we entered into a credit agreement that provides for a senior unsecured multi-currency revolving credit facility in an aggregate principal amount of up to $200.0 million, $30.0 million of which is available for the issuance of letters of credit. The credit agreement will mature on the earlier of December 15, 2027 or the date that is six months prior to the stated maturity date of the 2027 Notes unless the Notes have been redeemed, repurchased, converted or defeased in full. Additionally, the credit agreement has an accordion feature which allows for an increase in the total line of credit up to $300.0 million, in each lender’s sole discretion. At September 30, 2023 and December 31, 2022, there were no borrowings under the line. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit. As of September 30, 2023 we had letters of credit outstanding of approximately $7.4 million under the facility and available borrowing of $192.6 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at Term SOFR plus 1.25 to 1.75% per year determined in accordance with a pricing grid based on our net debt to earnings before interest expense, taxes, depreciation and amortization (“EBITDA”) ratio, which for the purposes of the credit agreement excludes investment interest income. “SOFR” is defined as a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York or a successor administrator of the secured overnight financing rate. We are required to comply with a net leverage ratio, defined as consolidated total indebtedness to EBITDA, of no greater than 3.50 to 1.00 based upon a trailing four fiscal quarter period. At September 30, 2023, our net leverage ratio was 0.27 to 1.00. Additionally, we must comply with a consolidated interest coverage ratio, defined as EBITDA to consolidated interest expense, of no less than 3.50 to 1.00 based upon a trailing four fiscal quarter period. We are compliant with the consolidated interest coverage ratio, which is not meaningful for the period ended September 30, 2023.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2023
Commitments and Contingencies.
Commitments and Contingencies	Note 13 - Commitments and Contingencies Product Litigation As a manufacturer of weapons and other law enforcement tools used in high-risk field environments, we are often the subject of products liability litigation concerning the use of our products. We are currently named as a defendant in four lawsuits in which the plaintiffs allege either wrongful death or personal injury in situations in which a TASER CED was used by law enforcement officers in connection with arrests or training. While the facts vary from case to case, these product liability claims typically allege defective product design, manufacturing, and/or failure to warn. They seek compensatory and sometimes punitive damages, often in unspecified amounts. We continue to aggressively defend all product litigation. As a general rule, it is our policy not to settle suspect injury or death cases. Exceptions are sometimes made where the settlement is strategically beneficial to us. Due to the confidential nature of our litigation strategy and the confidentiality agreements that are executed in the event of a settlement, we do not identify or comment on specific settlements by case or amount. Based on current information, we do not believe that the outcome of any such legal proceeding will have a material effect on our financial position, results of operations, or cash flows. We are self-insured for the first $5.0 million of any product claim made after 2014. No judgment or settlement has ever exceeded this amount in any products case. We continue to maintain product liability insurance coverage, including an insurance policy fronting arrangement, above our self-insured retention with various limits depending on the policy period. U.S. Federal Trade Commission Litigation In January 2020, the U.S. Federal Trade Commission (“FTC”) filed an administrative enforcement action regarding our May 2018 acquisition of an insolvent body worn camera competitor, Vievu LLC (“Vievu”). The FTC alleged the merger was anticompetitive and adversely affected the body worn camera and digital evidence management market for “large metropolitan police departments,” which we strongly denied. We sued the FTC in federal court challenging the FTC’s structure as unconstitutional. In April of this year, the Supreme Court unanimously held that Axon’s “existential” claims could proceed in federal court, and in August we filed our amended complaint in the District of Arizona. On October 6, 2023, the FTC unilaterally dismissed its administrative complaint against Axon without consent decree or other condition. We therefore dismissed our federal court claims as moot on October 10, 2023 ending this five-year dispute. In August 2023, the Township of Howell (NJ) filed a purported class action in the District of New Jersey alleging Sherman and Clayton Act violations, relying heavily on the now dismissed FTC allegations concerning the Vievu acquisition. Howell also sued Safariland LLC, which sold Vievu to Axon, alleging a companion holster supply agreement for TASER energy weapons impermissibly restrained trade, which we deny. Subsequently, the City of Baltimore (MD) and the City of Augusta (ME) filed suits making similar antitrust allegations. Axon will vigorously defend these actions, which are in the process of being consolidated. General From time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. After carefully assessing the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed reasonably possible but not probable, we determine whether it is possible to provide an estimate of the Based on our assessment of outstanding litigation and claims as of the date of these financial statements, we have determined that it is not reasonably probable that these lawsuits will individually, or in the aggregate, materially affect our results of operations, financial condition or cash flows. However, the outcome of any litigation is inherently uncertain and there can be no assurance that any expense, liability or damages that may ultimately result from the resolution of these matters will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage and will not have a material adverse effect on our operating results, financial condition or cash flows. Off-Balance Sheet Arrangements Under certain circumstances, we use letters of credit and surety bonds to guarantee our performance under various contracts, principally in connection with the installation and integration of Axon cameras and related technologies. Certain of our letters of credit and surety bonds have stated expiration dates with others being released as the contractual performance terms are completed. At September 30, 2023, we had outstanding letters of credit issued under our credit facility of $7.4 million that are expected to expire throughout 2023 and 2024.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss)	9 Months Ended
Accumulated Other Comprehensive Income (Loss)	Sep. 30, 2023
Accumulated Other Comprehensive Income (Loss).
Accumulated Other Comprehensive Income (Loss)	Note 14 – Accumulated Other Comprehensive Income (Loss) The following tables reflect the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2022 $ (1,251) (5,928) $ (7,179) Other comprehensive income 184 1,676 1,860 Balance, March 31, 2023 $ (1,067) $ (4,252) $ (5,319) Other comprehensive loss (850) (557) (1,407) Balance, June 30, 2023 $ (1,917) $ (4,809) $ (6,726) Other comprehensive income (loss) 656 (6,799) (6,143) Balance, September 30, 2023 $ (1,261) $ (11,608) $ (12,869) Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (489) (1,072) (1,561) Balance, March 31, 2022 $ (696) $ (2,182) $ (2,878) Other comprehensive loss (161) (2,166) (2,327) Balance, June 30, 2022 $ (857) $ (4,348) $ (5,205) Other comprehensive loss (326) (2,275) (2,601) Balance, September 30, 2022 $ (1,183) $ (6,623) $ (7,806)

Segment Data

Segment Data	9 Months Ended
Segment Data	Sep. 30, 2023
Segment Data
Segment Data	Note 15 - Segment Data Our operations comprise two reportable segments: the TASER segment and the Software and Sensors segment. Information relative to our reportable segments was as follows (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 153,375 $ 103,068 $ 256,443 $ 139,267 $ 71,131 $ 210,398 Net sales from services 9,195 147,963 157,158 5,616 95,740 101,356 Net sales 162,570 251,031 413,601 144,883 166,871 311,754 Cost of product sales 59,746 56,532 116,278 53,422 40,302 93,724 Cost of service sales 1,252 40,799 42,051 — 24,773 24,773 Cost of sales 60,998 97,331 158,329 53,422 65,075 118,497 Gross margin $ 101,572 $ 153,700 $ 255,272 $ 91,461 $ 101,796 $ 193,257 Research and development $ 15,672 $ 61,208 $ 76,880 $ 13,864 $ 45,263 $ 59,127 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 426,372 $ 282,934 $ 709,306 $ 382,142 $ 204,511 $ 586,653 Net sales from services 24,890 397,053 421,943 12,687 254,453 267,140 Net sales 451,262 679,987 1,131,249 394,829 458,964 853,793 Cost of product sales 170,297 154,757 325,054 142,510 118,068 260,578 Cost of service sales 2,517 112,183 114,700 — 70,256 70,256 Cost of sales 172,814 266,940 439,754 142,510 188,324 330,834 Gross margin $ 278,448 $ 413,047 $ 691,495 $ 252,319 $ 270,640 $ 522,959 Research and development $ 46,128 $ 173,619 $ 219,747 $ 37,076 $ 128,014 $ 165,090

Business Acquisition

Business Acquisition	9 Months Ended
Business Acquisition	Sep. 30, 2023
Business Acquisition
Business Acquisition	Note 16 – Business Acquisition During the nine months ended September 30, 2023, we completed an acquisition for total purchase consideration of $23.9 million. The purchase price included $2.2 million of contingent cash consideration, which is expected to be earned by the sellers upon meeting specified targets by July 1, 2027. Total transaction costs related to the acquisition were $1.7 million for the nine months ended September 30, 2023. These transaction costs were expensed as incurred in sales, general and administrative (“SG&A”) expenses in our condensed consolidated statements of operations. The purchase price allocation is subject to revision during the measurement period pending final asset valuation procedures and related calculations. Based on the purchase price allocation, we recorded $12.9 million of goodwill, $11.5 million of identifiable intangible assets, and $2.3 million in net tangible assets, excluding deferred taxes. We acquired a net deferred tax liability of $2.8 million. The goodwill generated from the acquisition is primarily attributable to synergies that are expected to be achieved from the integration of the business and is not deductible for tax purposes. We have assigned the goodwill to the Software and Sensors segment.

Organization and Summary of S_2

Organization and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2023
Organization and Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates	Basis of Presentation and Use of Estimates These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2022, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year (or any other period). Significant estimates and assumptions in these unaudited condensed consolidated financial statements include: ● product warranty reserves, ● inventory valuation, ● revenue recognition, ● reserve for expected credit losses, ● valuation of goodwill, intangible and long-lived assets, ● valuation of strategic investments, ● recognition, measurement and valuation of current and deferred income taxes, ● stock-based compensation, and ● recognition and measurement of contingencies and accrued litigation expense. The Company believes that estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from those estimates.
Segment Information	Segment Information 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 conducted electrical devices (“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. 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. Additional information related to our business segments is summarized in Note 15.
Geographic Information and Major Customers / Suppliers	Geographic Information and Major Customers / Suppliers For the three and nine months ended September 30, 2023, no individual country outside the United States represented more than 10% of total net sales. Individual sales transactions in the international market are generally larger and occur more intermittently than in the domestic market due to the profile of our customers. For the three and nine months ended September 30, 2023, no customer represented more than 10% of total net sales. At September 30, 2023 and December 31, 2022, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. We currently purchase both off the shelf and custom components, including, but not limited to, finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components, and off the shelf sub-assemblies from suppliers located in the United States, China, Republic of Korea, Malaysia, Mexico, Sri Lanka, Taiwan, and Vietnam. We may source from other countries as well. Although we currently obtain many of these components from single source suppliers, we own the injection molded component tooling, most of the designs, and the test fixtures used in their production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. Although we have previously experienced supply chain disruptions relating to materials and port constraints, we continue to manage potential logistical interruptions. We remain focused on closely managing our supply chain. We continue to bolster our strategic relationships in our supply chain, identifying secondary/alternate sourcing, adjusting build plans accordingly, and building in logistic modes in support of our increasing demand while working to minimize disruption to customers. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers.
Income per Common Share	Income per Common Share Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock options and unvested restricted stock units (“RSUs”). The effects of outstanding stock options, unvested RSUs, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire shares of our common stock (the “Warrants” or “2027 Warrants”) are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 59,397 $ 12,131 $ 116,956 $ 117,964 Denominator: Weighted average shares outstanding 74,826 71,107 73,904 71,033 Dilutive effect of stock-based awards 1,126 1,418 1,308 1,353 Diluted weighted average shares outstanding 75,952 72,525 75,212 72,386 Net income per common share: Basic $ 0.79 $ 0.17 $ 1.58 $ 1.66 Diluted $ 0.78 $ 0.17 $ 1.56 $ 1.63 Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock-based awards 481 2,977 470 2,952 2027 Notes 3,017 — 3,017 — 2027 Warrants 3,017 — 3,017 — Total potentially dilutive securities 6,515 2,977 6,504 2,952 For additional information regarding our 2027 Notes, refer to Note 9.
Standard Warranties	Standard Warranties We warranty our CEDs, Axon cameras and certain related accessories from manufacturing defects on a limited basis for a period of one year after purchase and, thereafter, will replace any defective unit for a fee. Estimated costs for the standard warranty are charged to cost of products sold when revenue is recorded for the related product. Future warranty costs are estimated on a quarterly basis based on historical data related to warranty claims and this rate is applied to current product sales. Historically, reserve amounts have been increased if management becomes aware of a component failure or other issue that could result in larger than anticipated warranty claims from customers. The warranty reserve is reviewed quarterly to verify that it sufficiently reflects the remaining warranty obligations based on the anticipated expenditures over the balance of the warranty obligation period, and adjustments are made when actual warranty claim experience differs from estimates. The warranty reserve is included in accrued liabilities on the accompanying consolidated balance sheets. Changes in our estimated product warranty liabilities were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (901) (1,988) Warranty expense 3,381 161 Balance, end of period $ 3,291 $ 995
Fair Value Measurements and Financial Instruments	Fair Value Measurements and Financial Instruments We use the fair value framework that prioritizes the inputs to valuation techniques for measuring financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: ● Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured. ● Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques. ● Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about inputs that market participants would use in pricing an asset or liability. We have cash equivalents and investments, which at September 30, 2023 comprised money market funds, commercial paper, corporate bonds, term deposits, U.S. government bonds, agency bonds, U.S. Treasury bills, and U.S. Treasury Inflation-Protected Securities Cash equivalents and investments at December 31, 2022 also included municipal bonds and certificates of deposit . We have an investment in marketable securities, for which c hanges in fair value are recorded in the condensed consolidated statement of operations as unrealized gain or (loss) on marketable securities, which is included in interest and other income (loss), net. We have strategic investments in eight unconsolidated affiliates as of September 30, 2023. The estimated fair value of the investments was determined based on Level 3 inputs. In determining the estimated fair value of our strategic investments in privately held companies, we utilize observable data available to us as discussed further in Note 6. We have convertible senior notes, for which the fair value is determined based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period. We consider the fair value of the Notes at September 30, 2023 to be a Level 2 measurement as they are not publicly traded. The fair value of the Notes is primarily affected by the trading price of our common stock and market interest rates. Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the condensed consolidated balance sheet.
Restricted Cash	Restricted Cash Restricted cash balance as of September 30, 2023 was $2.0 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.9 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder was $1.9 million primarily related to funds held in an international bank account securing a guarantee and funds held in an international bank account for a country in which we are required to maintain a minimum balance to operate. Approximately $1.8 million was included in prepaid expenses and other assets on our condensed consolidated balance sheet, with the remainder in other long-term assets.
Valuation of Goodwill, Intangibles and Long-lived Assets	Valuation of Goodwill, Intangibles and Long-lived Assets We evaluate whether events and changes in circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such events and changes in circumstances could include, but are not limited to, a change in our product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair value computed using discounted cash flows. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. We perform our annual goodwill and intangible asset impairment tests in the fourth quarter of each year.
Reclassification of Prior Year Presentation	Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications are not material and had no effect on the reported results of operations.

Organization and Summary of S_3

Organization and Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2023
Organization and Summary of Significant Accounting Policies
Schedule of weighted average number of shares outstanding and earnings per share	The calculation of the weighted average number of shares outstanding and earnings per share are as follows (in thousands except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator for basic and diluted earnings per share: Net income $ 59,397 $ 12,131 $ 116,956 $ 117,964 Denominator: Weighted average shares outstanding 74,826 71,107 73,904 71,033 Dilutive effect of stock-based awards 1,126 1,418 1,308 1,353 Diluted weighted average shares outstanding 75,952 72,525 75,212 72,386 Net income per common share: Basic $ 0.79 $ 0.17 $ 1.58 $ 1.66 Diluted $ 0.78 $ 0.17 $ 1.56 $ 1.63
Schedule of potentially dilutive securities excluded in calculation of diluted net income per share	Potentially dilutive securities that are not included in the calculation of diluted net income per share because doing so would be antidilutive are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Stock-based awards 481 2,977 470 2,952 2027 Notes 3,017 — 3,017 — 2027 Warrants 3,017 — 3,017 — Total potentially dilutive securities 6,515 2,977 6,504 2,952
Summary of changes in our estimated warranty reserve	Changes in our estimated product warranty liabilities were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Balance, beginning of period $ 811 $ 2,822 Utilization of reserve (901) (1,988) Warranty expense 3,381 161 Balance, end of period $ 3,291 $ 995

Revenues (Tables)

Revenues (Tables)	9 Months Ended
Revenues (Tables)	Sep. 30, 2023
Revenues.
Summary of Revenue by Product and Service Offering and Geography	The following tables present our revenues by primary product and service offering (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 86,718 $ — $ 86,718 $ 80,146 $ — $ 80,146 Cartridges 54,279 — 54,279 46,475 — 46,475 Axon Evidence and Cloud Services 8,975 150,563 159,538 5,125 96,814 101,939 Extended Warranties 8,078 16,054 24,132 7,290 14,511 21,801 Axon Body Cameras and Accessories — 52,488 52,488 — 40,944 40,944 Axon Fleet Systems — 26,716 26,716 — 10,139 10,139 Other (1) (2) 4,520 5,210 9,730 5,847 4,463 10,310 Total $ 162,570 $ 251,031 $ 413,601 $ 144,883 $ 166,871 $ 311,754 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total TASER Devices (Professional) $ 239,165 — $ 239,165 $ 213,623 $ — $ 213,623 Cartridges 149,504 — 149,504 134,145 — 134,145 Axon Evidence and Cloud Services 24,670 400,979 425,649 11,862 258,664 270,526 Extended Warranties 23,463 45,305 68,768 21,428 36,070 57,498 Axon Body Cameras and Accessories — 124,066 124,066 — 113,399 113,399 Axon Fleet Systems — 95,648 95,648 — 39,840 39,840 Other (1) (2) 14,460 13,989 28,449 13,771 10,991 24,762 Total $ 451,262 $ 679,987 $ 1,131,249 $ 394,829 $ 458,964 853,793 (1) TASER segment “Other” includes smaller categories, such as Virtual Reality (“VR”) hardware, weapons training revenue such as revenue associated with our Master Instructor School, and TASER consumer device sales. (2) Software and Sensors segment “Other” includes revenue from items including Signal Sidearm, Interview Room and Axon Air. The following table presents our revenues disaggregated by geography (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 342,090 83 % $ 264,644 85 % $ 954,949 84 % $ 707,304 83 % Other countries 71,511 17 47,110 15 176,300 16 146,489 17 Total $ 413,601 100 % $ 311,754 100 % $ 1,131,249 100 % $ 853,793 100 %
Summary of contract with customer, assets and liabilities	The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the nine months ended September 30, 2023 (in thousands): September 30, 2023 Contract assets, net $ 339,186 Contract liabilities (deferred revenue) 724,973 Revenue recognized in the period from: Amounts included in contract liabilities at the beginning of the period 279,223 Contract liabilities (deferred revenue) consisted of the following (in thousands): September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total Extended Warranty: TASER $ 12,500 $ 16,748 $ 29,248 $ 14,207 $ 17,618 $ 31,825 Software and Sensors 31,569 18,524 50,093 26,229 15,338 41,567 44,069 35,272 79,341 40,436 32,956 73,392 Hardware: TASER 28,908 29,056 57,964 49,361 12,640 62,001 Software and Sensors 77,207 109,573 186,780 50,426 109,227 159,653 106,115 138,629 244,744 99,787 121,867 221,654 Services: TASER 11,104 6,549 17,653 7,637 9,501 17,138 Software and Sensors 293,603 89,632 383,235 212,177 83,679 295,856 304,707 96,181 400,888 219,814 93,180 312,994 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040 September 30, 2023 December 31, 2022 Current Long-Term Total Current Long-Term Total TASER $ 52,512 $ 52,353 $ 104,865 $ 71,205 $ 39,759 $ 110,964 Software and Sensors 402,379 217,729 620,108 288,832 208,244 497,076 Total $ 454,891 $ 270,082 $ 724,973 $ 360,037 $ 248,003 $ 608,040

Cash, Cash Equivalents and In_2

Cash, Cash Equivalents and Investments (Tables)	9 Months Ended
Cash, Cash Equivalents and Investments (Tables)	Sep. 30, 2023
Cash, Cash Equivalents and Investments
Summary of Cash, Cash Equivalents, Marketable Securities, and Available-for-Sale Investments	The following tables summarize our cash, cash equivalents, marketable securities, and available-for-sale investments at September 30, 2023 and December 31, 2022 (in thousands): As of September 30, 2023 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 224,437 $ — $ — $ 224,437 $ 224,437 $ — $ — $ — Level 1: Money market funds 25,292 — — 25,292 25,292 — — — Agency bonds 170,838 17 (347) 170,508 33,500 — 137,008 — Treasury bills 133,779 20 — 133,799 122,813 — 10,986 — Marketable securities 90,000 — (21,150) 68,850 — 68,850 — — Subtotal 419,909 37 (21,497) 398,449 181,605 68,850 147,994 — Level 2: Term deposits 203,205 — — 203,205 — — 203,205 — Corporate bonds 121,071 8 (559) 120,520 — — 120,520 — U.S. government 176,371 — (700) 175,671 — — 175,671 — Treasury Inflation-Protected Securities 2,606 — (11) 2,595 — — 2,595 — Commercial paper 65,703 — — 65,703 — — 65,703 — Subtotal 568,956 8 (1,270) 567,694 — — 567,694 — Total $ 1,213,302 $ 45 $ (22,767) $ 1,190,580 $ 406,042 $ 68,850 $ 715,688 $ — As of December 31, 2022 Gross Gross Cash and Amortized Unrealized Unrealized Cash Marketable Short-Term Long-Term Cost Gains Losses Fair Value Equivalents Securities Investments Investments Cash $ 143,744 $ — $ — $ 143,744 $ 143,744 $ — $ — $ — Level 1: Money market funds 2,669 — — 2,669 2,669 — — — Agency bonds 164,486 6 (263) 164,229 — — 69,862 94,367 Treasury bills 121,650 18 (3) 121,665 113,100 — 8,565 — Marketable securities 90,000 — (50,760) 39,240 — 39,240 — — Subtotal 378,805 24 (51,026) 327,803 115,769 39,240 78,427 94,367 Level 2: State and municipal obligations 4,980 — (33) 4,947 — — 4,947 — Certificate of deposits 5,002 — — 5,002 — — 5,002 — Term deposits 200,000 — — 200,000 25,000 — 175,000 — Corporate bonds 257,422 33 (1,159) 256,296 28,883 — 168,074 59,339 U.S. government 30,525 — (159) 30,366 — — 30,366 — Treasury Inflation-Protected Securities 2,503 — (2) 2,501 — — — 2,501 Commercial paper 160,241 — — 160,241 40,288 — 119,953 — Subtotal 660,673 33 (1,353) 659,353 94,171 — 503,342 61,840 Total $ 1,183,222 $ 57 $ (52,379) $ 1,130,900 $ 353,684 $ 39,240 $ 581,769 $ 156,207

Expected Credit Losses (Tables)

Expected Credit Losses (Tables)	9 Months Ended
Expected Credit Losses (Tables)	Sep. 30, 2023
Expected Credit Losses
Schedule of roll-forward of allowance for credit losses	The following table provides a roll-forward of the allowance for expected credit losses for finance receivables and off-balance-sheet exposures. The expected credit losses for receivables is deducted from the amortized cost basis of accounts receivable, contract assets, and notes receivable to present the net amount expected to be collected (in thousands): Nine Months Ended September 30, 2023 United States Other countries Total Balance, beginning of period $ 3,064 $ 566 $ 3,630 Provision for expected credit losses 733 146 879 Amounts written off charged against the allowance (719) (105) (824) Other, including foreign currency translation — 8 8 Balance, end of period (1) $ 3,078 $ 615 $ 3,693 (1) Ending balance includes allowance for credit losses recorded in Other current liabilities on the Consolidated Balance Sheet which is related to off-balance-sheet credit exposurse.
Schedule of allowance for expected credit losses for each type of customer receivable	As of September 30, 2023 and December 31, 2022, the allowance for expected credit losses for each type of customer receivable and off-balance-sheet exposures were as follows (in thousands): September 30, 2023 December 31, 2022 Accounts receivable and notes receivable, current $ 2,144 $ 2,176 Contract assets, net 1,476 1,360 Long-term notes receivable, net of current portion 59 94 Other current liabilities 14 — Total allowance for expected credit losses on customer receivables $ 3,693 $ 3,630

Inventory (Tables)

Inventory (Tables)	9 Months Ended
Inventory (Tables)	Sep. 30, 2023
Inventory
Inventory	Inventory consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Raw materials $ 104,372 $ 72,740 Finished goods 155,747 129,731 Total inventory $ 260,119 $ 202,471

Strategic Investments (Tables)

Strategic Investments (Tables)	9 Months Ended
Strategic Investments (Tables)	Sep. 30, 2023
Strategic Investments
Schedule of Roll-Forward of Strategic Investments	The following tables provide a roll-forward of the balance of strategic investments (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 215,945 $ 459 $ 17,233 $ 233,637 $ 264,156 $ 1,195 16,340 $ 281,691 Investments 4,099 1,176 — 5,275 8,004 459 893 9,356 Fair value adjustments: Unrealized losses and impairments — (113) — (113) (718) — — (718) Exercises 1,500 — — 1,500 — — — — Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Strategic investments Warrants Call options Total Strategic investments Warrants Call options Total Balance, beginning of period $ 277,676 $ 1,654 $ 17,233 $ 296,563 $ 80,775 $ 2,745 — $ 83,520 Investments 15,016 1,176 — 16,192 53,164 459 17,233 70,856 Fair value adjustments: Unrealized gains — — — — 41,893 28,539 — 70,432 Unrealized losses and impairments (72,648) (1,308) — (73,956) (1,109) — — (1,109) Exercises 1,500 — — 1,500 96,719 (30,089) — 66,630 Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299 $ 271,442 $ 1,654 $ 17,233 $ 290,329 Inception to date Strategic investments Warrants Call options Total Investments $ 124,498 $ 4,222 $ 17,233 $ 145,953 Fair value adjustments: Realized gains 12,312 — — 12,312 Unrealized gains 74,817 29,073 — 103,890 Unrealized losses and impairments (73,756) (1,684) — (75,440) Exercises 98,219 (30,089) — 68,130 Sales (14,546) — — (14,546) Balance, end of period $ 221,544 $ 1,522 $ 17,233 $ 240,299

Variable Interest Entities (Tab

Variable Interest Entities (Tables)	9 Months Ended
Variable Interest Entities (Tables)	Sep. 30, 2023
Variable Interest Entities
Schedule of the nonconsolidated VIEs	September 30, 2023 December 31, 2022 Total unconsolidated variable interest entities: Carrying value of variable interest - assets $ 13,016 $ 11,530 Carrying value of variable interest - liabilities — — Maximum exposure to loss: Non-public equity (1) 13,016 11,530 Total $ 13,016 $ 11,530 (1)

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	9 Months Ended
Accrued Liabilities (Tables)	Sep. 30, 2023
Accrued Liabilities
Schedule of Accrued liabilities	September 30, 2023 December 31, 2022 Accrued salaries, commissions, benefits and bonus $ 92,437 $ 97,882 Accrued professional, consulting and lobbying fees 6,102 3,861 Accrued warranty expense 3,291 811 Accrued income and other taxes 3,358 13,559 Accrued inventory in transit 11,847 10,548 Other accrued expenses 29,905 29,273 Accrued liabilities $ 146,940 $ 155,934

Convertible Senior Notes (Table

Convertible Senior Notes (Tables)	9 Months Ended
Convertible Senior Notes (Tables)	Sep. 30, 2023
Convertible Senior Notes
Schedule of net carrying amount of convertible senior notes	The following table summarizes the carrying value of the Notes (in thousands): September 30, 2023 December 31, 2022 Principal $ 690,000 $ 690,000 Unamortized debt issuance costs (13,685) (16,033) Convertible notes carrying amount, net $ 676,315 $ 673,967 September 30, 2023 December 31, 2022 2027 Notes $ 738.4 $ 687.3
Schedule of interest expense of convertible senior notes	Interest expense related to the Notes was as follows (in thousands): Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 Contractual interest expense $ 863 $ 2,588 Amortization of debt issuance costs 797 2,328 Total interest expense $ 1,660 $ 4,916
Schedule of convertible note hedge transaction	Purchase Price Shares Purchased 2027 Note Hedge $ 194,994 3,016,680
Schedule of warrants details of convertible senior notes	Proceeds Shares Strike Price First Expiration 2027 Warrants $ 124,269 3,016,680 $ 338.86 March 15, 2028

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
Stockholders' Equity (Tables)	Sep. 30, 2023
Stockholders' Equity
Summary of Restricted Stock Unit Activity	The following table summarizes RSU activity for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,565 $ 145.38 Granted 464 203.71 Released (371) 118.04 Forfeited (104) 155.25 Units outstanding, end of period 1,554 168.67 $ 309,283
Summary of Performance Stock Unit Activity	The following table summarizes PSU activity, inclusive of XSUs, for the nine months ended September 30, 2023 (number of units and aggregate intrinsic value in thousands): Number of Weighted Average Aggregate Units Grant-Date Fair Value Intrinsic Value Units outstanding, beginning of year 1,369 $ 43.43 Granted 171 187.74 Released (1,222) 36.60 Forfeited (43) 27.52 Units outstanding, end of period 275 166.05 $ 54,768
Summary of the Company's Stock Options Activity	The following table summarizes stock option activity for the nine months ended September 30, 2023 (number of options and aggregate intrinsic value in thousands): Weighted Weighted Average Number Average Remaining of Exercise Contractual Aggregate Options Price Life (years) Intrinsic Value Options outstanding, beginning of year 2,438 $ 28.58 Granted — — Exercised (1,907) 28.58 Expired / terminated — — Options outstanding and exercisable, end of period 531 28.58 4.41 $ 90,476
Reported Share-Based Compensation	The following table summarizes the composition of stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of product sales and service sales $ 1,687 $ 1,157 $ 4,685 $ 3,331 Sales, general and administrative expenses 12,886 14,268 43,232 35,860 Research and development expenses 15,414 12,779 48,311 35,263 Total stock-based compensation expense $ 29,987 $ 28,204 $ 96,228 $ 74,454

Accumulated Other Comprehensi_2

Accumulated Other Comprehensive Income (Loss) (Tables)	9 Months Ended
Accumulated Other Comprehensive Income (Loss) (Tables)	Sep. 30, 2023
Accumulated Other Comprehensive Income (Loss).
Summary of changes in accumulated other comprehensive income (loss), net of tax	The following tables reflect the changes in accumulated other comprehensive income (loss), net of tax (in thousands): Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2022 $ (1,251) (5,928) $ (7,179) Other comprehensive income 184 1,676 1,860 Balance, March 31, 2023 $ (1,067) $ (4,252) $ (5,319) Other comprehensive loss (850) (557) (1,407) Balance, June 30, 2023 $ (1,917) $ (4,809) $ (6,726) Other comprehensive income (loss) 656 (6,799) (6,143) Balance, September 30, 2023 $ (1,261) $ (11,608) $ (12,869) Unrealized Gains (Losses) on Available-for-Sale Foreign Currency Investments Translation Total Balance, December 31, 2021 $ (207) $ (1,110) $ (1,317) Other comprehensive loss (489) (1,072) (1,561) Balance, March 31, 2022 $ (696) $ (2,182) $ (2,878) Other comprehensive loss (161) (2,166) (2,327) Balance, June 30, 2022 $ (857) $ (4,348) $ (5,205) Other comprehensive loss (326) (2,275) (2,601) Balance, September 30, 2022 $ (1,183) $ (6,623) $ (7,806)

Segment Data (Tables)

Segment Data (Tables)	9 Months Ended
Segment Data (Tables)	Sep. 30, 2023
Segment Data
Summary of Operational Information Relative to the Company's Reportable Segments	Information relative to our reportable segments was as follows (in thousands): Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 153,375 $ 103,068 $ 256,443 $ 139,267 $ 71,131 $ 210,398 Net sales from services 9,195 147,963 157,158 5,616 95,740 101,356 Net sales 162,570 251,031 413,601 144,883 166,871 311,754 Cost of product sales 59,746 56,532 116,278 53,422 40,302 93,724 Cost of service sales 1,252 40,799 42,051 — 24,773 24,773 Cost of sales 60,998 97,331 158,329 53,422 65,075 118,497 Gross margin $ 101,572 $ 153,700 $ 255,272 $ 91,461 $ 101,796 $ 193,257 Research and development $ 15,672 $ 61,208 $ 76,880 $ 13,864 $ 45,263 $ 59,127 Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 Software and Software and TASER Sensors Total TASER Sensors Total Net sales from products $ 426,372 $ 282,934 $ 709,306 $ 382,142 $ 204,511 $ 586,653 Net sales from services 24,890 397,053 421,943 12,687 254,453 267,140 Net sales 451,262 679,987 1,131,249 394,829 458,964 853,793 Cost of product sales 170,297 154,757 325,054 142,510 118,068 260,578 Cost of service sales 2,517 112,183 114,700 — 70,256 70,256 Cost of sales 172,814 266,940 439,754 142,510 188,324 330,834 Gross margin $ 278,448 $ 413,047 $ 691,495 $ 252,319 $ 270,640 $ 522,959 Research and development $ 46,128 $ 173,619 $ 219,747 $ 37,076 $ 128,014 $ 165,090

Organization and Summary of S_4

Organization and Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2023 USD ($) customer country	Sep. 30, 2023 USD ($) segment country customer item	Dec. 31, 2022 USD ($) customer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of reportable segments \| segment		2
Warranty period		1 year
Cash surrender value of corporate-owned life insurance policies	$ 5,900,000	$ 5,900,000	$ 4,300,000
Investments in number of unconsolidated affiliates \| item		8
Denomination of notes used for determination of fair value	1,000	$ 1,000
Restricted cash balance	2,000,000	2,000,000	1,900,000
Prepaid expenses and other assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Restricted cash balance	1,900,000	1,900,000	1,800,000
Other long-term assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Restricted cash balance	$ 100,000	$ 100,000	$ 100,000
Net Sales \| Geographic Concentration Risk
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of countries outside the U.S. representing more than 10% of total net sales \| country	0	0
Net Sales \| Customer Concentration Risk
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of major customers \| customer	0	0
Accounts and notes receivable and contract assets \| Customer Concentration Risk
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of major customers \| customer		0	0

Organization and Summary of S_5

Organization and Summary of Significant Accounting Policies - Weighted Average Number of Shares Outstanding and Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator for basic and diluted earnings per share:
Net income	$ 59,397	$ 12,420	$ 45,139	$ 12,131	$ 50,962	$ 54,871	$ 116,956	$ 117,964
Denominator:
Weighted average shares outstanding - basic (in shares)	74,826			71,107			73,904	71,033
Dilutive effect of stock-based awards (in shares)	1,126			1,418			1,308	1,353
Diluted weighted average shares outstanding (in shares)	75,952			72,525			75,212	72,386
Net income per common share:
Basic (in dollars per share)	$ 0.79			$ 0.17			$ 1.58	$ 1.66
Diluted (in dollars per share)	$ 0.78			$ 0.17			$ 1.56	$ 1.63

Organization and Summary of S_6

Organization and Summary of Significant Accounting Policies - Antidilutive Securities Excluded From Computation of EPS (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive securities excluded from computation of earnings per share
Total potentially dilutive securities	6,515	2,977	6,504	2,952
Stock-based awards
Antidilutive securities excluded from computation of earnings per share
Total potentially dilutive securities	481	2,977	470	2,952
2027 Notes
Antidilutive securities excluded from computation of earnings per share
Total potentially dilutive securities	3,017		3,017
2027 Warrants
Antidilutive securities excluded from computation of earnings per share
Total potentially dilutive securities	3,017		3,017

Organization and Summary of S_7

Organization and Summary of Significant Accounting Policies - Summary of Changes in Estimated Warranty Reserve (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Movement in Standard and Extended Product Warranty
Balance, beginning of period	$ 811	$ 2,822
Utilization of reserve	(901)	(1,988)
Warranty expense	3,381	161
Balance, end of period	$ 3,291	$ 995

Revenues - Revenues By Products

Revenues - Revenues By Products And Service Offerings (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	$ 413,601	$ 311,754	$ 1,131,249	$ 853,793
TASER Devices (Professional)
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	86,718	80,146	239,165	213,623
Cartridges
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	54,279	46,475	149,504	134,145
Axon Evidence and Cloud Services
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	159,538	101,939	425,649	270,526
Extended Warranties
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	24,132	21,801	68,768	57,498
Axon Body Cameras and Accessories
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	52,488	40,944	124,066	113,399
Axon Fleet Systems
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	26,716	10,139	95,648	39,840
Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	9,730	10,310	28,449	24,762
TASER
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	162,570	144,883	451,262	394,829
TASER \| TASER Devices (Professional)
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	86,718	80,146	239,165	213,623
TASER \| Cartridges
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	54,279	46,475	149,504	134,145
TASER \| Axon Evidence and Cloud Services
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	8,975	5,125	24,670	11,862
TASER \| Extended Warranties
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	8,078	7,290	23,463	21,428
TASER \| Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	4,520	5,847	14,460	13,771
Software and Sensors
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	251,031	166,871	679,987	458,964
Software and Sensors \| Axon Evidence and Cloud Services
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	150,563	96,814	400,979	258,664
Software and Sensors \| Extended Warranties
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	16,054	14,511	45,305	36,070
Software and Sensors \| Axon Body Cameras and Accessories
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	52,488	40,944	124,066	113,399
Software and Sensors \| Axon Fleet Systems
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	26,716	10,139	95,648	39,840
Software and Sensors \| Other
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	$ 5,210	$ 4,463	$ 13,989	$ 10,991

Revenues - Revenues By Geograph

Revenues - Revenues By Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	$ 413,601	$ 311,754	$ 1,131,249	$ 853,793
United States
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	342,090	264,644	954,949	707,304
Other countries
Disaggregation of Revenue [Line Items]
Revenue from contract with customers	$ 71,511	$ 47,110	$ 176,300	$ 146,489
Revenue from Contract with Customer \| Geographic Concentration Risk
Disaggregation of Revenue [Line Items]
Concentration risk (as a percentage)	100%	100%	100%	100%
Revenue from Contract with Customer \| Geographic Concentration Risk \| United States
Disaggregation of Revenue [Line Items]
Concentration risk (as a percentage)	83%	85%	84%	83%
Revenue from Contract with Customer \| Geographic Concentration Risk \| Other countries
Disaggregation of Revenue [Line Items]
Concentration risk (as a percentage)	17%	15%	16%	17%

Revenues - Contract Assets, Con

Revenues - Contract Assets, Contract Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Revenues.
Contract assets, net	$ 339,186
Contract liabilities (deferred revenue)	724,973	$ 608,040
Revenue recognized in the period from:
Amounts included in contract liabilities at the beginning of the period	$ 279,223

Revenues - Schedule Of Contract

Revenues - Schedule Of Contract Liabilities - Deferred revenue (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Disaggregation of Revenue [Line Items]
Current	$ 454,891	$ 360,037
Long-Term	270,082	248,003
Total	724,973	608,040
TASER
Disaggregation of Revenue [Line Items]
Current	52,512	71,205
Long-Term	52,353	39,759
Total	104,865	110,964
Software and Sensors
Disaggregation of Revenue [Line Items]
Current	402,379	288,832
Long-Term	217,729	208,244
Total	620,108	497,076
Extended Warranty
Disaggregation of Revenue [Line Items]
Current	44,069	40,436
Long-Term	35,272	32,956
Total	79,341	73,392
Extended Warranty \| TASER
Disaggregation of Revenue [Line Items]
Current	12,500	14,207
Long-Term	16,748	17,618
Total	29,248	31,825
Extended Warranty \| Software and Sensors
Disaggregation of Revenue [Line Items]
Current	31,569	26,229
Long-Term	18,524	15,338
Total	50,093	41,567
Hardware
Disaggregation of Revenue [Line Items]
Current	106,115	99,787
Long-Term	138,629	121,867
Total	244,744	221,654
Hardware \| TASER
Disaggregation of Revenue [Line Items]
Current	28,908	49,361
Long-Term	29,056	12,640
Total	57,964	62,001
Hardware \| Software and Sensors
Disaggregation of Revenue [Line Items]
Current	77,207	50,426
Long-Term	109,573	109,227
Total	186,780	159,653
Services
Disaggregation of Revenue [Line Items]
Current	304,707	219,814
Long-Term	96,181	93,180
Total	400,888	312,994
Services \| TASER
Disaggregation of Revenue [Line Items]
Current	11,104	7,637
Long-Term	6,549	9,501
Total	17,653	17,138
Services \| Software and Sensors
Disaggregation of Revenue [Line Items]
Current	293,603	212,177
Long-Term	89,632	83,679
Total	$ 383,235	$ 295,856

Revenues - Revenue Performance

Revenues - Revenue Performance Obligations (Details) $ in Billions	Sep. 30, 2023 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 5.8
Minimum \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation to be recognized in the next twelve months (as a percentage)	15%
Maximum \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation to be recognized in the next twelve months (as a percentage)	25%
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months
Maximum \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2033-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	10 years

Cash, Cash Equivalents and In_3

Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	$ 1,213,302	$ 1,213,302	$ 1,183,222
Gross Unrealized Gains	45	45	57
Gross Unrealized Losses	(22,767)	(22,767)	(52,379)
Fair Value	1,190,580	1,190,580	1,130,900
Cash and Cash Equivalents	406,042	406,042	353,684
Marketable Securities	68,850	68,850	39,240
Short-Term Investments	715,688	715,688	581,769
Long-Term Investments			156,207
Debt securities, available-for-sale, unrealized Loss		390,400
Continuous unrealized loss position of available-for-sale investments, unrealized losses	27,000	27,000
Continuous unrealized loss position of available-for-sale investments, gross unrealized losses	300	300
Share Purchase Agreement with CLBT
Restricted Cash and Cash Equivalents Items [Line Items]
Marketable Securities				$ 90,000
Investment owned, shares held				9
Investment, type				Common stock
Marketable securities, unrealized gain (loss)	4,100	29,600
Fair Value, Inputs, Level 1
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	419,909	419,909	378,805
Gross Unrealized Gains	37	37	24
Gross Unrealized Losses	(21,497)	(21,497)	(51,026)
Fair Value	398,449	398,449	327,803
Cash and Cash Equivalents	181,605	181,605	115,769
Marketable Securities	68,850	68,850	39,240
Short-Term Investments	147,994	147,994	78,427
Long-Term Investments			94,367
Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	568,956	568,956	660,673
Gross Unrealized Gains	8	8	33
Gross Unrealized Losses	(1,270)	(1,270)	(1,353)
Fair Value	567,694	567,694	659,353
Cash and Cash Equivalents			94,171
Short-Term Investments	567,694	567,694	503,342
Long-Term Investments			61,840
Cash
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	224,437	224,437	143,744
Fair Value	224,437	224,437	143,744
Cash and Cash Equivalents	224,437	224,437	143,744
Money market funds \| Fair Value, Inputs, Level 1
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	25,292	25,292	2,669
Fair Value	25,292	25,292	2,669
Cash and Cash Equivalents	25,292	25,292	2,669
Agency bonds \| Fair Value, Inputs, Level 1
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	170,838	170,838	164,486
Gross Unrealized Gains	17	17	6
Gross Unrealized Losses	(347)	(347)	(263)
Fair Value	170,508	170,508	164,229
Cash and Cash Equivalents	33,500	33,500
Short-Term Investments	137,008	137,008	69,862
Long-Term Investments			94,367
Treasury bills \| Fair Value, Inputs, Level 1
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	133,779	133,779
Gross Unrealized Gains	20	20
Fair Value	133,799	133,799
Cash and Cash Equivalents	122,813	122,813
Short-Term Investments	10,986	10,986
Marketable securities \| Fair Value, Inputs, Level 1
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	90,000	90,000	90,000
Gross Unrealized Losses	(21,150)	(21,150)	(50,760)
Fair Value	68,850	68,850	39,240
Marketable Securities	68,850	68,850	39,240
State and municipal obligations \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost			4,980
Gross Unrealized Losses			(33)
Fair Value			4,947
Short-Term Investments			4,947
Corporate bonds \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost			257,422
Gross Unrealized Gains			33
Gross Unrealized Losses			(1,159)
Fair Value			256,296
Cash and Cash Equivalents			28,883
Short-Term Investments			168,074
Long-Term Investments			59,339
Treasury bills \| Fair Value, Inputs, Level 1
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost			121,650
Gross Unrealized Gains			18
Gross Unrealized Losses			(3)
Fair Value			121,665
Cash and Cash Equivalents			113,100
Short-Term Investments			8,565
Certificates of deposit \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost			5,002
Fair Value			5,002
Short-Term Investments			5,002
Term deposits \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	203,205	203,205	200,000
Fair Value	203,205	203,205	200,000
Cash and Cash Equivalents			25,000
Short-Term Investments	203,205	203,205	175,000
Corporate bonds \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	121,071	121,071
Gross Unrealized Gains	8	8
Gross Unrealized Losses	(559)	(559)
Fair Value	120,520	120,520
Short-Term Investments	120,520	120,520
Commercial paper \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	65,703	65,703	160,241
Fair Value	65,703	65,703	160,241
Cash and Cash Equivalents			40,288
Short-Term Investments	65,703	65,703	119,953
U.S. government \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	176,371	176,371	30,525
Gross Unrealized Losses	(700)	(700)	(159)
Fair Value	175,671	175,671	30,366
Short-Term Investments	175,671	175,671	30,366
Treasury Inflation-Protected Securities \| Fair Value, Inputs, Level 2
Restricted Cash and Cash Equivalents Items [Line Items]
Amortized Cost	2,606	2,606	2,503
Gross Unrealized Losses	(11)	(11)	(2)
Fair Value	2,595	2,595	2,501
Short-Term Investments	$ 2,595	$ 2,595
Long-Term Investments			$ 2,501

Expected Credit Losses (Details

Expected Credit Losses (Details) $ in Thousands	9 Months Ended
Expected Credit Losses (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	$ 3,630
Provision for expected credit losses	879
Amounts written off charged against the allowance	(824)
Other, including foreign currency translation	8
Balance, end of period	3,693
United States
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	3,064
Provision for expected credit losses	733
Amounts written off charged against the allowance	(719)
Balance, end of period	3,078
Other countries
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	566
Provision for expected credit losses	146
Amounts written off charged against the allowance	(105)
Other, including foreign currency translation	8
Balance, end of period	$ 615

Expected Credit Losses - Type O

Expected Credit Losses - Type Of Customer Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Expected Credit Losses
Accounts receivable and notes receivable, current	$ 2,144	$ 2,176
Contract assets, net	1,476	1,360
Long-term notes receivable, net of current portion	59	94
Other current liabilities	14
Total allowance for expected credit losses on customer receivables	$ 3,693	$ 3,630

Inventory (Details)

Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Inventory
Raw materials	$ 104,372	$ 72,740
Finished goods	155,747	129,731
Total inventory	$ 260,119	$ 202,471

Strategic Investments (Details)

Strategic Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		43 Months Ended
Strategic Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023
Equity Securities without Readily Determinable Fair Value [Line Items]
Balance, beginning of period	$ 233,637	$ 281,691	$ 296,563	$ 83,520
Investments	5,275	9,356	16,192	70,856	$ 145,953
Fair value adjustments, Realized gains					12,312
Fair value adjustments, Unrealized gains			0	70,432	103,890
Fair value adjustments, Unrealized losses and impairments	(113)	(718)	(73,956)	(1,109)	(75,440)
Exercises	1,500		1,500	66,630	68,130
Sales					(14,546)
Balance, end of period	240,299	290,329	240,299	290,329	240,299
Strategic investments
Equity Securities without Readily Determinable Fair Value [Line Items]
Balance, beginning of period	215,945	264,156	277,676	80,775
Investments	4,099	8,004	15,016	53,164	124,498
Fair value adjustments, Realized gains					12,312
Fair value adjustments, Unrealized gains			0	41,893	74,817
Fair value adjustments, Unrealized losses and impairments		(718)	(72,648)	(1,109)	(73,756)
Exercises	1,500		1,500	96,719	98,219
Sales					(14,546)
Balance, end of period	221,544	271,442	221,544	271,442	221,544
Warrants
Equity Securities without Readily Determinable Fair Value [Line Items]
Balance, beginning of period	459	1,195	1,654	2,745
Investments	1,176	459	1,176	459	4,222
Fair value adjustments, Unrealized gains			0	28,539	29,073
Fair value adjustments, Unrealized losses and impairments	(113)		(1,308)		(1,684)
Exercises				(30,089)	(30,089)
Balance, end of period	1,522	1,654	1,522	1,654	1,522
Call options
Equity Securities without Readily Determinable Fair Value [Line Items]
Balance, beginning of period	17,233	16,340	17,233
Investments		893		17,233	17,233
Fair value adjustments, Unrealized gains			0	0
Balance, end of period	$ 17,233	$ 17,233	17,233	$ 17,233	$ 17,233
Strategic Investments And Warrants
Equity Securities without Readily Determinable Fair Value [Line Items]
Unrealized impairment loss			$ 73,800

Variable Interest Entities (Det

Variable Interest Entities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Total unconsolidated variable interest entities:
Carrying value of variable interest - assets	$ 3,254,183	$ 2,851,894
Carrying value of variable interest - liabilities	1,733,066	1,583,403
Unconsolidated VIEs
Total unconsolidated variable interest entities:
Carrying value of variable interest - assets	13,016	11,530
Carrying value of variable interest - liabilities	0	0
Maximum exposure to loss:
Non-public equity	13,016	11,530
Total	$ 13,016	$ 11,530

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Accrued Liabilities
Accrued salaries, commissions, benefits and bonus	$ 92,437	$ 97,882
Accrued professional, consulting and lobbying fees	6,102	3,861
Accrued warranty expense	3,291	811	$ 995	$ 2,822
Accrued income and other taxes	3,358	13,559
Accrued inventory in transit	11,847	10,548
Other accrued expenses	29,905	29,273
Accrued liabilities	$ 146,940	$ 155,934

Convertible Senior Notes - Narr

Convertible Senior Notes - Narrative (Details) - 2027 Notes - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Dec. 31, 2022	Sep. 30, 2023
Senior Convertible Notes
Aggregate principal amount	$ 690,000	$ 690,000
Interest rate (as a percent)	0.50%
Issuance costs	$ 16,200
Net proceeds from issuance of notes	$ 673,800
Effective interest rate	0.99%
Repurchase price (as percentage)		100%
Maximum
Senior Convertible Notes
Additional principal amount purchase option	$ 90,000

Convertible Senior Notes - Net

Convertible Senior Notes - Net carrying amount (Details) - 2027 Notes - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Senior Convertible Notes
Principal	$ 690,000	$ 690,000
Unamortized debt issuance costs	(13,685)	(16,033)
Convertible notes carrying amount, net	$ 676,315	$ 673,967

Convertible Senior Notes - Esti

Convertible Senior Notes - Estimated Fair Value (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Senior Convertible Notes
Denomination of notes used for determination of fair value	$ 1,000
2027 Notes
Senior Convertible Notes
Denomination of notes used for determination of fair value	1,000	$ 1,000
Fair value of notes	$ 738,400,000	$ 687,300,000

Convertible Senior Notes - Inte

Convertible Senior Notes - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Senior Convertible Notes
Amortization of debt issuance costs		$ 2,328
Convertible Note Hedge 2027
Senior Convertible Notes
Contractual interest expense	$ 863	2,588
Amortization of debt issuance costs	797	2,328
Total interest expense	$ 1,660	$ 4,916

Convertible Senior Notes - Hedg

Convertible Senior Notes - Hedge (Details) - 2027 Note Hedge	Sep. 30, 2023 USD ($) security
Senior Convertible Notes
Purchase price	$ 194,994
Shares purchased	3,016,680

Convertible Senior Notes - Warr

Convertible Senior Notes - Warrants (Details) - 2027 Warrant	9 Months Ended
	Sep. 30, 2023 USD ($) D $ / security shares
Senior Convertible Notes
Proceeds \| $	$ 124,269
Shares \| shares	3,016,680
Strike Price \| $ / security	338.86
Warrants exercise trading day period \| D	60

Income Taxes (Details)

Income Taxes (Details) $ in Millions	9 Months Ended
Income Taxes (Details) $ in Millions	Sep. 30, 2023 USD ($)
Income Taxes
Deferred tax assets, net	$ 211.4
Liability for unrecognized tax benefits	25.6
Research and development tax credit studies	$ 5.5
Effective tax rate (as a percentage)	(17.90%)
Effective tax rate, before discrete period adjustment (as a percentage)	17.40%
Discrete tax benefit, stock-based compensation	$ 36.8

Stockholders' Equity - CEO Perf

Stockholders' Equity - CEO Performance Award - Additional Information (Details) $ in Millions		3 Months Ended	9 Months Ended	64 Months Ended
	May 24, 2018 tranche shares	Sep. 30, 2023 USD ($)	Sep. 30, 2023 item shares	Sep. 30, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recorded share-based compensation expense \| $		$ 0		$ 246
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options, Granted (in shares) \| shares	6,365,856
Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of market capitalization and operational goals \| item			12
Number of operational goals \| item			12
Number of vesting tranches of share-based awards \| tranche	12
Chief Executive Officer \| Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options vested \| shares			6,400,000

Stockholders' Equity - eXponent

Stockholders' Equity - eXponential Stock Performance Plan (Details) $ in Millions	3 Months Ended	9 Months Ended	56 Months Ended	64 Months Ended
	Sep. 30, 2023 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recorded share-based compensation expense	$ 0			$ 246
eXponential Stock Units \| 2019 eXponential Stock Performance Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recorded share-based compensation expense			$ 199.4
Unrecognized stock-based compensation expense	$ 0.5	$ 0.5	$ 0.5	$ 0.5
Weighted average period over which costs are recognized		2 months 12 days

Stockholders' Equity - Summary

Stockholders' Equity - Summary of RSU and PSU Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number of Units outstanding, beginning of year (in shares) \| shares	1,565
Number of Units, Granted (in shares) \| shares	464
Number of Units, Released (in shares) \| shares	(371)
Number of Units, Forfeited (in shares) \| shares	(104)
Number of Units outstanding, end of period (in shares) \| shares	1,554
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted Average Grant Date Fair Value, Units outstanding, beginning of year (in dollars per share) \| $ / shares	$ 145.38
Weighted Average Grant Date Fair Value, Granted (in dollars per share) \| $ / shares	203.71
Weighted Average Grant Date Fair Value, Released (in dollars per share) \| $ / shares	118.04
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) \| $ / shares	155.25
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) \| $ / shares	$ 168.67
Aggregate intrinsic value at end of period \| $	$ 309,283
Performance Stock Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Number of Units outstanding, beginning of year (in shares) \| shares	1,369
Number of Units, Granted (in shares) \| shares	171
Number of Units, Released (in shares) \| shares	(1,222)
Number of Units, Forfeited (in shares) \| shares	(43)
Number of Units outstanding, end of period (in shares) \| shares	275
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted Average Grant Date Fair Value, Units outstanding, beginning of year (in dollars per share) \| $ / shares	$ 43.43
Weighted Average Grant Date Fair Value, Granted (in dollars per share) \| $ / shares	187.74
Weighted Average Grant Date Fair Value, Released (in dollars per share) \| $ / shares	36.60
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) \| $ / shares	27.52
Weighted Average Grant Date Fair Value, Units outstanding, end of period (in dollars per share) \| $ / shares	$ 166.05
Aggregate intrinsic value at end of period \| $	$ 54,768

Stockholders' Equity - RSU and

Stockholders' Equity - RSU and PSU - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tax payments, for net share settlement of share based award	$ 104,076	$ 2,391
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value price per share (in dollars per share)	$ 198.99
Unrecognized stock-based compensation expense	$ 193,800
Weighted average period over which costs are recognized	2 years 1 month 6 days
Shares withheld, for net share settlement of share based award (in shares)	17,000
Tax payments, for net share settlement of share based award	$ 3,300
Performance Stock Units (PSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value price per share (in dollars per share)	$ 198.99
Unrecognized stock-based compensation expense	$ 22,600
Weighted average period over which costs are recognized	4 years 9 months 18 days
Shares withheld, for net share settlement of share based award (in shares)	500,000
Tax payments, for net share settlement of share based award	$ 100,800

Stockholders' Equity - Stock Op

Stockholders' Equity - Stock Option Activity - Additional Information (Details) - Employee Stock Option [Member] shares in Millions	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value price per share (in dollars per share) \| $ / shares	$ 198.99
Shares sold to cover tax obligation \| shares	0.9

Stockholders' Equity - Summar_2

Stockholders' Equity - Summary of the Company's Stock Options Activity (Details) - Employee Stock Option [Member] $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Number of options, Options outstanding, beginning of year (in shares) \| shares	2,438
Number of options, Exercised (in shares) \| shares	(1,907)
Number of options, Options outstanding and exercisable, end of period (in shares) \| shares	531
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted average exercise price, Options outstanding, beginning of year (in dollars per share) \| $ / shares	$ 28.58
Weighted average exercise price, Exercised (in dollars per share) \| $ / shares	28.58
Weighted average exercise price, Options outstanding and exercisable, end of period (in dollars per share) \| $ / shares	$ 28.58
Weighted average remaining contractual life, Options outstanding and exercisable, end of period	4 years 4 months 28 days
Aggregate intrinsic value, Options outstanding and exercisable, end of period \| $	$ 90,476

Stockholders' Equity - Reported

Stockholders' Equity - Reported Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 29,987	$ 28,204	$ 96,228	$ 74,454
Cost of product sales and service sales
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	1,687	1,157	4,685	3,331
Sales, general and administrative expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	12,886	14,268	43,232	35,860
Research and development expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 15,414	$ 12,779	$ 48,311	$ 35,263

Stockholders' Equity - Stock In

Stockholders' Equity - Stock Incentive and Repurchase Plan - Additional Information (Details) - USD ($) shares in Millions, $ in Millions	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	May 31, 2022	Feb. 29, 2016
2022 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance (in shares)			2.5
2016 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding common stock repurchase program authorized amount (up to)				$ 50
Shares repurchased during period (in shares)	0	0
Remaining authorized repurchase amount	$ 16.3
2022 Inducement Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant (in shares)	2.3

Stockholders' Equity - At-the-M

Stockholders' Equity - At-the-Market equity offering - Additional Information (Details) - ATM Offering $ in Millions	9 Months Ended
	Sep. 30, 2023 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock sold (in shares) \| shares	467,594
Gross proceeds \| $	$ 96.4
Net proceeds \| $	94.7
Commissions \| $	$ 1.7
Maximum number of common stock shares to be sold \| shares	3,000,000
Number of shares remaining to be sold \| shares	2,000,000

Line of Credit (Details)

Line of Credit (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
Line of Credit (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Debt instrument covenant consolidated leverage ratio	0.27
Senior Unsecured Multi Currency Revolving Credit Facility
Debt Instrument [Line Items]
Total availability under line of credit agreement		$ 200
Line of Credit
Debt Instrument [Line Items]
Total availability under line of credit agreement		30
Accordion feature allowing for increase in borrowing capacity		300
Letters of credit outstanding amount	$ 7.4
Available borrowing under letter of credit	192.6
Line of credit borrowings	$ 0	$ 0
Line of Credit \| 2027 Notes
Debt Instrument [Line Items]
Debt Instrument, Maturity, Prior to Stated Maturity of Convertible Senior Notes		6 months
Minimum
Debt Instrument [Line Items]
Debt instrument covenant consolidated interest coverage ratio	3.50
Minimum \| Line of Credit \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate (as a percentage)	1.25%
Maximum
Debt Instrument [Line Items]
Debt instrument covenant consolidated leverage ratio	3.50
Maximum \| Line of Credit \| Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Debt instrument basis spread on variable rate (as a percentage)	1.75%

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions		9 Months Ended
Commitments and Contingencies (Details) $ in Millions	Oct. 10, 2023	Sep. 30, 2023 USD ($) lawsuit
Loss Contingencies [Line Items]
Number of lawsuits against Company \| lawsuit		4
Amount self-insured for any product claim		$ 5
Legal dispute period	5 years
Surety Bond
Loss Contingencies [Line Items]
Letters of credit outstanding amount		7.4
Expiring in 2024 \| Surety Bond
Loss Contingencies [Line Items]
Bonds outstanding		$ 10.5

Accumulated Other Comprehensi_3

Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022
Accumulated other comprehensive income (loss):
Beginning balance	$ 1,444,998	$ 1,402,995	$ 1,268,491	$ 1,193,651	$ 1,124,789	$ 1,047,849
Other comprehensive (loss) income	(6,143)	(1,407)	1,860	(2,601)	(2,327)	(1,561)
Ending balance	1,521,117	1,444,998	1,402,995	1,231,313	1,193,651	1,124,789
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss):
Beginning balance	(6,726)	(5,319)	(7,179)	(5,205)	(2,878)	(1,317)
Other comprehensive (loss) income	(6,143)	(1,407)	1,860	(2,601)	(2,327)	(1,561)
Ending balance	(12,869)	(6,726)	(5,319)	(7,806)	(5,205)	(2,878)
Unrealized Gains (Losses) on Available-for-Sale Investments
Accumulated other comprehensive income (loss):
Beginning balance	(1,917)	(1,067)	(1,251)	(857)	(696)	(207)
Other comprehensive (loss) income	656	(850)	184	(326)	(161)	(489)
Ending balance	(1,261)	(1,917)	(1,067)	(1,183)	(857)	(696)
Foreign Currency Translation
Accumulated other comprehensive income (loss):
Beginning balance	(4,809)	(4,252)	(5,928)	(4,348)	(2,182)	(1,110)
Other comprehensive (loss) income	(6,799)	(557)	1,676	(2,275)	(2,166)	(1,072)
Ending balance	$ (11,608)	$ (4,809)	$ (4,252)	$ (6,623)	$ (4,348)	$ (2,182)

Segment Data (Details)

Segment Data (Details) $ in Thousands	3 Months Ended		9 Months Ended
Segment Data (Details) $ in Thousands	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) segment	Sep. 30, 2022 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments of company \| segment			2
Net sales	$ 413,601	$ 311,754	$ 1,131,249	$ 853,793
Cost of sales	158,329	118,497	439,754	330,834
Gross margin	255,272	193,257	691,495	522,959
Research and development	76,880	59,127	219,747	165,090
TASER
Segment Reporting Information [Line Items]
Net sales	162,570	144,883	451,262	394,829
Cost of sales	60,998	53,422	172,814	142,510
Gross margin	101,572	91,461	278,448	252,319
Research and development	15,672	13,864	46,128	37,076
Software and Sensors
Segment Reporting Information [Line Items]
Net sales	251,031	166,871	679,987	458,964
Cost of sales	97,331	65,075	266,940	188,324
Gross margin	153,700	101,796	413,047	270,640
Research and development	61,208	45,263	173,619	128,014
Product
Segment Reporting Information [Line Items]
Net sales	256,443	210,398	709,306	586,653
Cost of sales	116,278	93,724	325,054	260,578
Product \| TASER
Segment Reporting Information [Line Items]
Net sales	153,375	139,267	426,372	382,142
Cost of sales	59,746	53,422	170,297	142,510
Product \| Software and Sensors
Segment Reporting Information [Line Items]
Net sales	103,068	71,131	282,934	204,511
Cost of sales	56,532	40,302	154,757	118,068
Service
Segment Reporting Information [Line Items]
Net sales	157,158	101,356	421,943	267,140
Cost of sales	42,051	24,773	114,700	70,256
Service \| TASER
Segment Reporting Information [Line Items]
Net sales	9,195	5,616	24,890	12,687
Cost of sales	1,252		2,517
Service \| Software and Sensors
Segment Reporting Information [Line Items]
Net sales	147,963	95,740	397,053	254,453
Cost of sales	$ 40,799	$ 24,773	$ 112,183	$ 70,256

Business Acquisition (Details)

Business Acquisition (Details) - USD ($) $ in Thousands	9 Months Ended
Business Acquisition (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Business Acquisition
Goodwill	$ 57,344	$ 44,983
Business Acquisitions
Business Acquisition
Total Consideration	23,900
Contingent consideration, Amount	2,200
Transaction costs	1,700
Goodwill	12,900
Identifiable intangible assets	11,500
Net tangible assets	2,300
Deferred tax liability	$ 2,800

Pay vs Performance Disclosure

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 59,397	$ 12,420	$ 45,139	$ 12,131	$ 50,962	$ 54,871	$ 116,956	$ 117,964

Insider Trading Arrangements

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2023 shares
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	The table below describes the contracts, instructions or written plans for the purchase or sale of securities adopted by our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) during the three months ended September 30, 2023, that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Certain of our officers or directors have made, and may from time to time make, elections to have shares withheld or sold to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K). No other Rule 10b5-1 trading arrangements or “non-Rule 10b5-1 trading arrangements” (as defined by S-K Item 408(c)) were entered into, modified, or terminated by our directors or officers during such period. Name and Title Adoption Date Expiration Date Aggregate Number of Securities to be Sold Jeffrey Kunins, Chief Product Officer and Chief Technology Officer August 11, 2023 January 15, 2024 41,167 Brittany Bagley, Chief Operating Officer and Chief Financial Officer August 18, 2023 November 30, 2024 15,000 Joshua Isner, President September 15, 2023 December 31, 2024 35,400
Rule 10b5-1 Arrangement Adopted	true
Jeffrey Kunins
Trading Arrangements, by Individual
Adoption Date	August 11, 2023
Aggregate Available	41,167
Expiration Date	January 15, 2024
Brittany Bagley
Trading Arrangements, by Individual
Adoption Date	August 18, 2023
Aggregate Available	15,000
Expiration Date	November 30, 2024
Joshua Isner
Trading Arrangements, by Individual
Adoption Date	September 15, 2023
Aggregate Available	35,400
Expiration Date	December 31, 2024