- Both non-GAAP net income and Adjusted EBITDA exclude stock-based compensation expenses and net gains or losses related to our strategic investment portfolio.
Operating cash flow reflects a $16 million outflow in the quarter, an improvement of $40 million year over year and in-line with expected cash flow seasonality of prepaid expenses and other payments, such as company-wide bonus payouts and commission payments tied to strong 2023 performance.
As of March 31, 2024, Axon had $964 million in cash, cash equivalents and investments, and outstanding convertible notes in principal amount of $690 million, for a net cash position of $274 million, down $279 million sequentially, primarily driven by the closed acquisition of Fusus.
Financial commentary by segment
Software & Sensors |
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| THREE MONTHS ENDED |
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| 31 MAR 2024 |
| 31 DEC 2023 |
| 31 MAR 2023 |
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Axon Cloud & Services revenue(1) |
| $ | 176,467 |
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| $ | 163,632 |
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| $ | 116,453 |
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| 7.8 | % |
| 51.5 | % |
Axon Cloud & Services gross margin |
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| 72.8 | % |
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| 74.6 | % |
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| 73.2 | % |
| (180) | bp |
| (40) | bp |
Axon Cloud & Services adjusted gross margin |
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| 74.5 | % |
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| 75.2 | % |
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| 73.8 | % |
| (70) | bp |
| 70 | bp |
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| Sensors & Other revenue |
| $ | 105,521 |
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| $ | 107,167 |
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| $ | 92,308 |
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| (1.5) | % |
| 14.3 | % |
| Sensors & Other gross margin |
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| 38.7 | % |
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| 46.3 | % |
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| 38.2 | % |
| (760) | bp |
| 50 | bp |
| Sensors & Other adjusted gross margin |
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| 46.9 | % |
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| 46.5 | % |
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| 38.6 | % |
| 40 | bp |
| 830 | bp |
| ________________ | |
| (1) | The TASER segment includes Cloud and Services revenue, which is not included here. |
- Axon Cloud & Services revenue growth of 51.5% year over year was primarily driven by user growth and increasing adoption of premium add-on features related to Axon Evidence, real-time operations and productivity software.
- Axon Cloud & Services gross margin of 72.8% decreased modestly from 73.2% year over year primarily due to increased stock-based compensation expense related to vesting events from a one-time enhanced equity compensation program and amortization expense of acquired intangible assets. Adjusted gross margin of 74.5% increased from 73.8% year over year due to increased mix to higher margin software revenues relative to low-margin professional services. Our software-only gross margin continues to exceed our target of 80%.
- Sensors & Other revenue growth of 14.3% year over year was driven by growth in Axon Body cameras and accessories due to higher volumes, partially offset by lower Axon Fleet systems volumes on more normalized deployment timelines.
- Sensors & Other gross margin of 38.7% increased modestly from 38.2% year over year as improvement from manufacturing overhead reallocations made in the second quarter of 2023 was offset by an increased stock-based compensation expense related to vesting events from a one-time enhanced equity compensation program. Sensors & Other adjusted gross margin of 46.9% increased from 38.6% year over year due to favorable product mix and manufacturing overhead reallocations made in the second quarter of 2023.
