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Actionable news in TASR: TASER International, Inc.,

Taser Reports Record Quarterly Revenue Of

The following excerpt is from the company's SEC filing.

$50.4 million

Axon and bookings reach new quarterly record of

$36.9 million


November 3, 2015

− TASER International, Inc. (NASDAQ: TASR), today announced financial results for the

quarter ended

September 30, 2015

“Our team delivered once-again, outstanding top-line revenue and Axon bookings growth in the third quarter surpassing even internal expectations,” said Rick Smith, TASER chief executive officer. “As a result of our continued investment in research and development we successfully announced three disruptive products including Axon Fleet, Axon Body 2 and Axon Interview all with unprecedented unlimited HD data storage plans at an attractive price point. The expansion of our Axon product portfolio has furthered our position as a market leader and put us in a positive position to capture market share. The third quarter presented several solid leading indicators that our Axon segment was accelerating faster than even we anticipated. We moved decisively to accelerate our strategy to invest in sales and marketing to ensure the Company was well positioned and kept a strong market lead. We believe the potential global Total Available Market (TAM) for our Axon solutions is approximately $3 billion annually, hence our significant investments in this space. These investments are paying off, not only in the record third quarter sales and bookings results, but in our expectation for increased bookings in the fourth quarter, as well as a strong 2016,” concluded Smith.

"Currently, we're witnessing a major shift and exciting transformation of TASER's business and the recent announcements of Axon Fleet, Axon Body 2 and the expanded Axon platform provides an insight into the strategic vision held by TASER," said Hadi Partovi, TASER board member. "The Axon software platform with multiple hardware extensions provides a unified law enforcement experience from TASER similar to what consumers see today with the Apple or Android ecosystems. This lays the foundation for tremendous growth and is the beginning of an incredible story," concluded Partovi.

Quarter 2015 Financial Highlights:

Net sales were

in the quarter, an increase of

$6.0 million

over the prior year third quarter. International sales were

$6.7 million

in the quarter.

TASER Weapons segment revenues declined

$0.5 million

year-over-year, or

$39.5 million

quarter of

. The decrease of

$1.1 million

in sales of legacy TASER X26 CEW, which was retired from production as of December 31, 2014 was partially offset by an increase in cartridge sales of

$0.9 million

compared to

. For the nine months ended September 30, 2015, the TASER Weapons revenues increased

$10.5 million

over the same period in the prior year.

Axon segment revenues increased by

$6.5 million


$10.9 million

in comparison to the prior year

quarter. The increase was partially driven by a

$2.0 million

increase, or


, in service revenue compared to the

quarter 2014 which was driven by increased license counts and higher monthly per license revenues for as well as increased professional services delivered. Axon body-worn camera hardware sales increased

$3.2 million

compared to the prior year period as more agencies continue to adopt these technologies. For the nine months ended September 30, 2015, the Axon segment revenues increased

$13.6 million


Consolidated gross margin in the

, compared to

in the same period last year mostly due to a larger mix of lower margin Axon hardware product sales within the quarter compared to the prior year.

TASER Weapons segment gross margins remained relatively consistent at

Axon segment gross margins improved to

. Axon hardware product margins (excluding Axon services) increased to

in the prior year. Axon service margins increased to

in the prior year due to the leverage of the fixed costs to operate and host the service.

Sales, general and administrative (SG&A) expenses of

$17.8 million

$5.4 million

, from

$12.4 million

. As a percentage of revenue, SG&A increased to

quarter. Compared to the prior year, personnel expenses increased $2.0 million as the Company has increased customer-facing positions as well as some administrative functions. Consulting expenses increased approximately $1.7 million partially due to public relations efforts ahead of the IACP conference. Also, marketing expenses as well as travel expenses each increased approximately $0.3 million, as the Company works to grow its international presence. The Company expects SG&A expenses to continue to further increase in the fourth quarter of

as the Company continues to

invest and grow the infrastructure necessary to achieve its initiatives of increasing revenues internationally and in the Axon segment, and driving CEWs to standard issue for all officers domestically.

Research and development (R&D) expenses of

$2.8 million

when compared to the

which was driven by additional personnel, testing material and consulting expenses related to Axon segment product development initiatives. The Company continues to expect further increased expenses in R&D in the fourth quarter of

as it adds headcount to support new functionality and new capabilities to the Axon platform, cameras and related hardware.

Income from operations decreased

$5.8 million

$12.5 million

due to the above mentioned increases in SG&A and R&D.

Provision for income taxes in the

$5.2 million

. The Company's expected effective tax rate for 2015 is 47.7% due to changes in expectations for the profitability of the new TASER International subsidiary located in The Netherlands. As the Company’s foreign subsidiary scales up its investment in infrastructure and operations, the Company does not expect it to be profitable in 2015. Losses generated by the foreign subsidiary are not deductible for U.S. Tax purposes which has the ultimate impact of driving up the Company's effective tax rate to 47.7%. While these international infrastructure investments temporarily create an increased tax rate in 2015, we expect these investments to drive both increased sales and lower long term tax rates starting in 2016. Specific to 2016, the Company expects an annual effective tax rate in the 36% to 40% range.

Net income for the

$1.5 million

per diluted share, compared to

$7.6 million

per diluted share in the

. The change in effective tax rate had an approximately $0.04 impact per diluted share for the

In the

, the Company produced

$19.3 million

in cash from operating activities. Cash, cash equivalents and investments were

$104.6 million

, up from

$90.4 million

December 31, 2014

. Included in these balances were

$9.2 million

$9.3 million

in long-term investments as of

, respectively.

Key Operating Metrics:

During the earnings conference call scheduled for November 3, 2015 at 10 a.m. ET, the Company's management will discuss the four key statistical metrics that are the driver's of our business strategy. Management will also discuss our estimate of the Total Addressable Market for the Axon Segment, which is estimated at $3.0 billion per year globally for our existing product and service segments, including recently announced extensions.


Q3 2015

Axon and Bookings (in millions)


Average revenue per user

TASER Weapons operating income %

Future Contracted Revenue (in millions)

*For definitions of our Key Operating Metrics please see "Statistical Definitions"

Business Highlights:

As of the end of the

quarter, 28 major city law enforcement agencies have purchased TASER's Axon body-worn cameras and/or its digital evidence management solution: Albuquerque, Charlotte-Mecklenburg, Chicago, Cleveland, Dallas, Denver, Fort Worth, Fresno, Kansas City, Long Beach, Los Angeles, Las Vegas, Louisville, Memphis, Mesa, Miami, Milwaukee, Montgomery County, New Orleans, Philadelphia, Pittsburgh, Salt Lake City, San Diego, San Francisco, Tampa, Toronto, Tucson, and Washington, D.C.'s user count continued to grow, extending the Company's market leadership. Total active, paid users at

were approximately 33,000. Since inception, the Company has booked cumulative licenses of approximately 45,800. The 12,800 seats booked but not yet recognized in monthly service revenue will come online as the Company completes customer implementations and integrations.

In addition to the strong bookings figure, future billings were $99.2 million at the end of the

quarter and future contracted revenue was

$122.4 million

, 79% of the purchasers of Axon body-worn video cameras purchased the Company's digital evidence management solution,

More than 90% of contracts in the

had multiple year terms. The...