“We are off to a strong start in 2016 with double-digit Weapons growth, record Axon and Evidence.com bookings, and record international revenues,” said Rick Smith, TASER CEO and co-founder. “We continue to extend our technology leadership position in each of our business segments domestically while gaining traction in new international markets. As we progress throughout the year, we plan to further enhance our comprehensive platform offering and service delivery capabilities to law enforcement.”
Dan Behrendt, TASER chief financial officer, commented, “We continue to drive top-line growth and maintain solid profitability while prudently investing in our strategic development for sustainable, long-term performance. We maintain a disciplined approach, and we are pleased in the returns we are seeing on our earlier investments. We continue to expect bookings growth to exceed operating expense growth in 2016 for our Axon and Evidence.com businesses.”
First Quarter 2016 Financial Highlights:
- Net sales were $55.5 million in the quarter, an increase of $10.8 million, or 24.1% over the prior year first quarter. International sales were $13.1 million in the quarter.
- TASER Weapons segment revenues increased $7.5 million year-over-year, or 19.5%, to $45.8 million in the first quarter of 2016.
- Axon segment revenues increased by $3.3 million to $9.7 million, a 51.0% increase in the first quarter of 2016 compared to the prior year first quarter.
- Consolidated gross margin was 66.5% in the first quarter of 2016 compared to 66.7% in the same period last year.
- TASER Weapons segment gross margin was 69.3% in first quarter 2016 compared to 71.1% in first quarter 2015.
- Axon segment gross margins improved to 53.1% in the first quarter 2016 compared to 40.6% in the first quarter of 2015. Axon service margins increased to 75.8% in the first quarter of 2016 compared to 65.3% in the prior year. Axon hardware product margins (excluding Axon services) increased to 30.2% compared to 30.1% in the prior year.
- Sales, general and administrative (SG&A) expenses of $24.8 million in the first quarter of 2016 increased $10.3 million, from $14.6 million in the first quarter of 2015. The increase is primarily due to increased headcount, expense related to international expansion, and higher variable compensation.
- Research and development (R&D) expenses of $6.9 million for the first quarter of 2016 increased $2.4 million when compared to the first quarter of 2015. The increase is primarily related to increased headcount and variable compensation.
- Income from operations was $5.1 million in the first quarter of 2016 compared to $10.7 million in the first quarter of 2015. This is primarily due to an increase in operating expenses of $12.6 million partially offset by a $10.8 million increase in revenue on relatively flat gross margins.
- Net income for the first quarter of 2016 was $3.5 million, or $0.06 per diluted share, compared to $7.2 million, or $0.13 per diluted share, in the first quarter of 2015.
- Adjusted EBITDA for the first quarter of 2016 of $8.4 million, a decrease of $4.6 million or 35.6% from $13.0 million in the first quarter of 2015.
- In the first quarter of 2016, the Company generated $7.1 million in cash from operating activities. Cash, cash equivalents and investments were $114.1 million at March 31, 2016, compared to $118.3 million at December 31, 2015. Included in these balances were $10.0 million and $8.5 million in long-term investments as of March 31, 2016 and December 31, 2015, respectively.
- Results for the first quarter 2016 include an out-of-period adjustment of $0.7 million related to accrued expenses and variable compensation related obligations related to the fourth quarter of 2015. Additional details related to these transactions will be provided in our Form 10-Q to be filed with the SEC in the coming weeks.
- As of the end of the first quarter of 2016, 32 major city law enforcement agencies have purchased TASER’s Axon body-worn cameras and/or its digital evidence management solution: Albuquerque, Baltimore, Baltimore County, Charlotte-Mecklenburg, Chicago, Cleveland, Dallas, Denver, Fort Worth, Fresno, Kansas City*, Los Angeles, Las Vegas, Louisville,Memphis, Mesa, Miami, Milwaukee, Minneapolis, Montgomery County, New Orleans, Omaha, Philadelphia*, Pittsburgh, Salt Lake City, San Antonio, San Diego, San Francisco, Tampa, Toronto*, Tucson, and Washington, DC.