Axon Enterprise (AXON) 10-K risk factor changes: FY2022 vs FY2021

We are [removed: materially] [added: substantially] dependent on acceptance of our products by law enforcement markets, throughout the world.

If law enforcement agencies do not continue to purchase and use our [removed: products,] [added: products and services,] our [removed: revenues] [added: growth prospects, operating results and financial conditions] will be [added: materially] adversely affected.

At any point, [removed: due to external factors and opinions,] whether or not related to [removed: product performance,] [added: the performance of our products and services,] law enforcement agencies may elect to no longer purchase our CEDs or other [removed: products.][added: products and services.]

In the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] we derived a significant portion of our revenues from sales of TASER brand devices and related cartridges, [added: whether on a standalone basis or as part of a bundled offering,] and expect to depend on sales of these products for a significant portion of our revenue for the foreseeable future.

We may choose to carry higher [removed: level] [added: levels] of [removed: inventories] [added: inventory] to mitigate the risk of production delays, which may in turn expose us to an increased risk of obsolescence.

We [removed: are devoting] [added: have devoted, and continue to devote,] significant resources to develop and deploy our cloud-based productivity and real-time operations SaaS solutions, which we [removed: intend] [added: continue] to broadly deploy to a large number of customers.

If we are unable to develop scalable solutions that can be consistently configured for customers with minimal effort, or if we are unable to grow a professional services team that can consistently configure our products to meet the requirements of large numbers of customers in a timely and cost-effective manner, our ability to broadly scale our cloud-based productivity and real-time operations SaaS solutions could be negatively impacted, and our [removed: deployment costs] [added: business prospects, operating results and financial condition] could [added: be] negatively [removed: impact our operating results.][added: impacted..]

While we have some patent protection in certain key areas of our [removed: CED,] Axon [removed: device] [added: device, CED] and SaaS technology, new technology may result in competing products that operate outside our patents and could present significant competition for our products, which could adversely affect our business, financial results and competitive position.

Our distribution strategy is to pursue sales through multiple channels [removed: with an emphasis on] [added: which is principally through] direct sales and independent distributors.

We are focusing on direct sales to larger agencies through our regional sales managers [removed: and our inability to grow sales to these agencies in this manner could adversely affect our sales.]

[removed: Our] [added: and our] inability to [added: grow sales to these agencies in this manner would materially adversely affect our business prospects, operating results and financial condition In addition, our inability to] establish relationships with and retain law enforcement equipment distributors, who we believe can successfully sell our products, would [added: materially] adversely affect our [removed: sales.][added: business prospects, operating results and financial condition.]

[added: If we do not competitively price] our [added: products, meet the requirements of our] distributors or end-users, provide adequate marketing support, or comply with the terms of our distribution arrangements, our distributors may fail to aggressively market our products or may terminate their relationships with us.

[removed: These events could harm] our [removed: operating results,] financial condition or [removed: cash flows.][added: results of operations and could harm our reputation.]

A disruption or failure of our systems or operations in the event of a major earthquake, weather event, fire, explosion, failure to contain hazardous materials, industrial accident, utility failure, cyber-attack, terrorist attack, public health crisis, [added: pandemic,] or other catastrophic event could cause delays in completing sales, providing services, or performing other mission-critical functions.

[removed: | | ● |] Economic slowdowns [removed: that] [added: can also] negatively [removed: affect] [added: impact] municipal and state tax collections and put pressure on law enforcement budgets [removed: that in turn increases] [added: which may increase] the risk that our customers will be unable to appropriate funds for existing or future contracts with [removed: us; this could also affect customer demand and ability to pay, cause decreases in sales, and negatively impact the realizability of our accounts and notes receivable and contract assets; |][added: us.]

We are continuously monitoring our operations and intend to take appropriate actions to mitigate the risks arising from [removed: the COVID-19 pandemic,] [added: catastrophic events,] but there can be no assurances that we will be successful in doing so.

[removed: Higher costs or unavailability] [added: Unavailability] of materials [added: or higher costs] could adversely affect our financial results.

These delays could cause significant delays in manufacturing and loss of sales, leading to adverse effects significantly impacting [removed: our financial condition or results of operations and could injure our reputation.]

[removed: Disruptions] [added: For example, there have been disruptions] in the semi-conductor supply chain [added: that] could [removed: cause a disruption in] [added: negatively impact] our ability to make our products.

International or domestic geopolitical or other events, including the imposition of new or increased tariffs and/or quotas by the U.S. government on any of these raw materials or components and other government trade policies, could adversely impact the supply and cost of these raw materials or components, and could adversely impact [removed: the profitability of] our [removed: operations.][added: revenues, profitability and financial condition.]

[removed: While we have actively implemented programs] [added: We may be unable] to [removed: increase buffer inventory levels as well as] transition [added: away] from China [removed: along with] [added: to other jurisdictions or obtain] secondary sources [removed: of] [added: for] raw materials [removed: outside of China, future actions or events] [added: which] could result in a material adverse effect on our revenues, profitability and financial condition.

To the extent demand for our products increases, our future success will be dependent upon our ability to manage our growth and to increase manufacturing production [removed: capacity, which may be accomplished by the implementation of customized manufacturing automation equipment.][added: capacity.]

Our primary strategies to accomplish this include introducing additional shifts, increasing the physical size of our assembly facilities, the hiring of additional production staff, and the implementation of additional customized [added: manufacturing] automation equipment.

Our inability to meet any future increase in sales demand or effectively manage our expansion could have a material adverse effect on our revenues, [removed: financial] [added: operating] results and financial condition.

Significant delays in new product or service releases or significant problems in creating new products or services could adversely affect our business, [removed: financial results] [added: operating results, cash flows] and competitive position.

Changes in civil forfeiture statutes or regulations [removed: are outside of our control and] could limit the amount of funds available to our customers, which could adversely affect the sale of our products.

We devote significant resources to engineer secure products and ensure security vulnerabilities are mitigated, and we require our third-party service providers to do so as [removed: well.][added: well; however, security breaches that have not had a material effect on our business or our third-party service providers have occurred and will continue to occur, including as a result of third-party action, employee error, and malfeasance or otherwise.]

Breaches could occur during transfer of [removed: data to data] [added: data-to-data] centers or at any time, and result in unauthorized [added: physical or electronic] access to our data or our customers’ data.

Defects in our products could reduce demand for our products [added: or result in product recalls] and result in a loss of sales, delay in market acceptance and damage to our reputation.

[removed: Defects in our products could result in a loss of sales, delay in market] acceptance, damage to our reputation and increased warranty costs, which could adversely affect our business, financial results and competitive position.

| | ● | Import and export requirements, tariffs, trade disputes and barriers, product certification requirements, [added: sanctions,] and customs classifications that may prevent us from offering products or providing services to a particular market or obtaining necessary parts and components to manufacture products, which may lead to decreased sales and may increase our operating costs. |

Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our officers, or our employees, prohibitions on the conduct of our business and on our ability to offer our products and services in one or more countries, and could also materially [added: adversely] affect our brand, our international growth efforts, our ability to attract and retain employees, our business, and our operating results.

Although we have employment agreements with our officers and other members of our executive management team, the employment of such persons is “at-will” and either we or the employee can terminate the employment relationship at any time, subject to the [removed: applicable terms of the employment agreements.]

Our equity incentives and ongoing stock and option grants are subject to having sufficient shares [added: under our stock plan and any new plans or increases in the number of shares available for grant under existing plans must be] approved by our shareholders.

[removed: Global] [added: Material adverse developments in domestic and global] economic [removed: conditions] [added: conditions, or the occurrence of other world events,] could materially adversely affect our revenue and results of operations.

We may experience a decline in gross margins due to a shift in product sales [removed: from CEDs] to software and sensors products and services which may continue to carry a lower gross [removed: margin.][added: margin than that of Tasers.]

[removed: Gross] [added: In 2022, gross] margin as a percentage of net sales for the Software and Sensors segment [removed: is currently lower than that of] [added: was 59.5% while it was 63.3% for] the TASER segment, and may continue to be lower in the [removed: future.][added: future thus decreasing our consolidated gross margin.]

Our SaaS service revenue is generally recognized ratably over the terms of the contracts, which generally range from one to [removed: five] [added: ten] years.

Consequently, current [added: trends, whether] positive or [removed: negative trends] [added: negative,] in this portion of our business may not be fully reflected in our revenue results for several periods.

Some government agency orders may also be canceled or substantially delayed due to budgetary, political or other scheduling delays, which frequently occur in connection with the acquisition of products by such agencies, and such cancellations may accelerate or be more severe than we have [removed: experienced historically.]

For example, in the past, we believe that our sales were adversely impacted by negative coverage and publicity surrounding our products and services and their use.

If law enforcement agencies no longer purchase our products and services, or materially decrease their purchases, our growth prospects, operating results and financial condition will be materially adversely affected.

Acquisitions of, or investments in, other companies, products, or technologies may require significant management attention and could disrupt our business, dilute stockholder value, and adversely affect our operating results.

Our business strategy may include acquiring other complementary products, technologies or businesses.

Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may be subject to third-party approvals, such as government regulatory approvals, which are beyond our control.

Consequently, we can make no assurance that these transactions once undertaken and announced, will close.

These kinds of acquisitions or investments may result in unforeseen operating difficulties and expenditures.

If we acquire businesses or technologies, we may not be able to integrate the acquired personnel, operations, and technologies successfully, or effectively manage the combined business following the acquisition.

We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:

| | ● | inability to integrate or benefit from acquired technologies, products, personnel or services in a profitable manner; |

| | ● | unanticipated costs or liabilities associated with the acquisition, including potential liabilities due to litigation and potential identified or unknown security vulnerabilities in acquired technologies that expose us to additional security risks or delay our ability to integrate the product into our offerings or recognize the benefits of our investment; |

| | ● | differences between our values and those of an acquired company, as well as potential disruptions to our workplace culture; |

| | ● | incurrence of acquisition-related costs, including costs related to integration activities; |

| | ● | difficulty integrating the accounting and information systems, operations, and personnel of the acquired business; |

| | ● | augmenting the acquired technologies and platforms to the levels that are consistent with our brand and reputation; |

| | ● | difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; |

| | ● | challenges converting the acquired company’s revenue recognition policies and forecasting the related revenues, including subscription-based revenues and software license revenues; |

| | ● | potential write-offs of acquired assets or investments, and potential financial and credit risks associated with acquired customers; |

| | ● | difficulty converting the customers of the acquired business onto our platform and contract terms; |

| | ● | diversion of management’s attention and other company resources; |

| | ● | harm to our existing business relationships with business partners and customers as a result of the acquisition; |

| | ● | the potential loss of key employees; |

| | ● | use of resources that are needed in other parts of our business; and |

| | ● | use of substantial portions of our available cash to consummate the acquisition. |

We cannot assure you that the anticipated benefits of any acquisition or investment would be realized or that we would not be exposed to unknown liabilities or risks.

Integrating an acquired technology, asset or business into our operations can be challenging, complex and costly and we cannot assure you that we will be successful or that the anticipated benefits of the acquisitions that we complete will be realized or outweigh their costs.

If our integration and development efforts are not successful and the anticipated benefits of the acquisitions that we complete are not achieved, our business, operating results, financial condition, and prospects could be adversely affected.

In connection with these types of transactions, we may issue additional equity securities that would dilute our stockholders, use cash that we may need in the future to operate our business, incur debt on terms unfavorable to us or that we are unable to repay, incur large charges or substantial liabilities, encounter difficulties integrating diverse business cultures and values, and become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges.

These challenges could adversely affect our business, operating results, financial condition, and prospects.

For example, revenue from TASER 7 for 2022 was impacted by approximately $35.0 million for orders that were scheduled to ship prior to December 31, 2022, but could not be fulfilled due to the delayed receipt of a manufacturing component for our TASER 7 devices.

Additionally, Axon Body revenue was impacted by approximately $15.5 million for orders that were scheduled to ship prior to December 31, 2022, but could not be fulfilled due to supply chain constraints for our Axon Body 3 devices.

Due to the unique requirements of the TASER 10, we purchase our raw materials from a limited number of suppliers.

Some of the raw materials that are used in the TASER 10 may be subject to fluctuations in market price which we may be unable to pass through to our customers to offset market fluctuations.

Because of the unique requirements of the TASER 10, we cannot change suppliers easily.

Any delay or interruption in the supply of these raw materials could impair our ability to manufacture and deliver the TASER 10, harm our reputation or cause a reduction in revenues.

Various factors contribute to the uncertain economic environment, including the conflict between Russia and Ukraine, the increase in, and volatility of, interest rates, high inflation, an actual recession or fears of a recession, trade policies and tariffs and geopolitical tensions.

Global supply chain and labor market challenges could also negatively affect our performance as well as the performance of our suppliers.

Interest rate increases have also created financial market volatility and could further negatively impact financial markets, lead to an economic downturn or recession or have an adverse effect on our operating results.

In addition, geopolitical risks could affect our customers’ budgets and policies.

These and other factors may adversely affect customer demand and ability to pay, cause decrease in sales, and negatively impact the realizability of our accounts and notes receivable and contract assets.

These products include, but are not limited to, Axon Records, Axon Respond, and future generations of the TASER CED and Axon Body Cameras.

If we do not competitively price our products, meet the requirements of

Acquisitions, joint ventures, and other strategic investments may have an adverse effect on our business.

We may consider additional acquisitions, joint ventures, or other strategic investments as part of our long-term business strategy.

These transactions involve significant challenges and risks including that the transaction does not advance our business strategy, expected synergies are not achieved, we do not realize a satisfactory return on our investment, we experience difficulty in the integration or coordination of new employees, business systems, and technology, we incur unanticipated liabilities or impairments, or management’s attention is diverted from our other businesses.

Catastrophic events may disrupt our business.

The COVID-19 global pandemic has adversely affected workforces, economies, and financial markets globally, and led to an economic downturn.

As an essential provider of products and services for law enforcement and other first responders, we remain focused on protecting the health and well-being of our employees while assuring the continuity of our business operations.

Although the severity of the pandemic has lessened with the rollout of vaccines and travel restrictions, remote working and schooling and social distancing requirements have been lifted or eased in varying degrees in varying locations throughout the United States and the world, continuing surges and variants have caused certain restrictions to be re-implemented in varying degrees and in varying locations.

The severity and duration of the pandemic, including future surges and variants, is impossible to predict.

As a result, the ongoing pandemic continues to present various risks that may affect our operations and financial results, including, but not limited to:

| | ● | Manufacturing disruptions at our Scottsdale headquarters or at our suppliers; |

| | ● | A change in our classification as an essential business that impairs our ability to continue operating; |

| | ● | Costs incurred to shut down and decontaminate our facilities if the virus is detected; |

| | ● | Extended illness, incapacitation or death of key personnel or executives; |

| | ● | Ongoing governmental mandates to shutdown factories or limit travel and the movement of people that causes interruptions to our business, supply chain or extended supply chain; |

| | ● | Compounding risk from continued surges in infections around the world, including in the U.S.; and |

| | ● | Additional airline bankruptcies or further reduction in very limited global freight capacity that causes interruptions to our supply chain or extended supply chain |

These events have had and could continue to have an impact on our operations.

For example, other industries are experiencing a significant shortage of semiconductors in their supply chains.

We are tracking second-and third-level constraints and have taken steps to mitigate the potential impacts by building in buffers in our raw materials inventory and ensuring our suppliers have adequate access to raw material levels aligned to our forecasts.

Our service involves the storage and transmission of customers’ proprietary information, and security breaches could expose us to a risk of loss of information or the total or partial deletion or encryption of all stored customer data, litigation and possible liability.

Despite these efforts, security measures may be breached as a result of third-party action, employee error, and malfeasance or otherwise.

Our business in the United Kingdom may be negatively impacted by the exit of the United Kingdom from the EU (commonly referred to as "Brexit").

The exit itself could negatively impact the United Kingdom and other economies, which could adversely affect sales of our products and services.

We may also experience increased volatility in the value of the pound sterling, the euro and other European currencies.

In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations in the United Kingdom and the EU, and we may incur additional costs or need to make operational changes as we adapt to potentially divergent regulatory frameworks.

The competition for our key employees is intense and market competition for top talent has increased since our introduction of our innovative performance-based stock compensation plans in 2018.

Our suppliers may fail to deliver components according to schedules, prices, quality and volumes that are acceptable to us, or we may be unable to manage these components effectively.

Our products contain many parts purchased globally from numerous suppliers, including single-source direct suppliers, which exposes us to multiple potential sources of component shortages.

Unexpected changes in business

conditions, materials pricing, labor issues, wars, trade policies, natural disasters, health epidemics such as the global COVID-19 pandemic, trade and shipping disruptions, port congestions and other factors beyond our or our suppliers’ control could also affect these suppliers’ ability to deliver components to us or to remain solvent and operational.

We have used alternative parts to mitigate the challenges caused by these shortages, but there is no guarantee we may be able to continually do so as we scale production to meet projected future sales activity.

The unavailability of any component or supplier could result in production delays, as well as impact our ability to fulfill our obligations under customer contracts.

While we believe that we will be able to secure additional or alternate sources for most of our components, there is no assurance that we will be able to do so quickly or at all.

A growing portion of our sales are derived from subscription billing arrangements and on an open credit basis.

For awards containing multiple service, performance and market conditions, where all conditions must be satisfied prior to vesting, compensation expense is recognized over the requisite service period, which is defined as the longest explicit, implicit or derived service period, based on management’s estimate of the probability and timing of the performance criteria being satisfied, adjusted at each balance sheet date.

Fluctuations in foreign

publicly available, and/or expend significant resources to develop or acquire non-infringing technologies.

Although there are currently no federal laws restricting sales of our core currently offered CED products in the U.S., future federal regulation could adversely affect sales of our products.

This section discusses our results of operations for the year ended December 31, [removed: 2021] [added: 2022] as compared to the year ended December 31, [removed: 2020.][added: 2021.]

For a discussion and analysis of the year ended December 31, [removed: 2020,] [added: 2021,] compared to the same period in [removed: 2019] [added: 2020] please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, [removed: 2020,] [added: 2021,] filed with the SEC on February [removed: 26, 2021.][added: 25, 2022.]

Our revenues for the year ended December 31, [removed: 2021] [added: 2022] were [removed: $863.4] [added: $1,189.9] million, an increase of [removed: $182.4] [added: $326.6] million, or [removed: 26.8%,] [added: 37.8%,] from the prior year.

We had [removed: a loss] [added: income] from operations of [removed: $168.1] [added: $93.3] million compared to [removed: $14.2] [added: a loss from operations of $168.1] million in the prior year.

[removed: For] [added: We recorded net income of $147.1 million for] the year ended December 31, [removed: 2021, we recorded net loss of $60.0 million] [added: 2022] compared to [added: a] net loss of [removed: $1.7] [added: $60.0] million [removed: for the prior year.][added: in 2021.]

| Net sales from products | | $ | [removed: 608,525] [added: 801,388] | | [removed: 70.5] [added: 67.3] | % | ​ | $ | [removed: 500,250] [added: 608,525] | | [removed: 73.5] [added: 70.5] | % |

| Net sales from services | ​ | | [removed: 254,856] [added: 388,547] | | [removed: 29.5] [added: 32.7] | ​ | ​ | | [removed: 180,753] [added: 254,856] | | [removed: 26.5] [added: 29.5] | ​ |

| Net sales | ​ | | [removed: 863,381] [added: 1,189,935] | | 100.0 | ​ | ​ | | [removed: 681,003] [added: 863,381] | | 100.0 | ​ |

| Cost of product sales | ​ | | [removed: 260,098] [added: 363,219] | | [removed: 30.1] [added: 30.5] | ​ | ​ | | [removed: 224,131] [added: 260,098] | | [removed: 32.9] [added: 30.1] | ​ |

| Cost of service sales | ​ | | [removed: 62,373] [added: 98,078] | | [removed: 7.2] [added: 8.3] | ​ | ​ | | [removed: 40,541] [added: 62,373] | | [removed: 6.0] [added: 7.2] | ​ |

| Cost of sales | ​ | | [removed: 322,471] [added: 461,297] | | [removed: 37.3] [added: 38.8] | ​ | ​ | | [removed: 264,672] [added: 322,471] | | [removed: 38.9] [added: 37.3] | ​ |

| Gross margin | ​ | | [removed: 540,910] [added: 728,638] | | [removed: 62.7] [added: 61.2] | ​ | ​ | | [removed: 416,331] [added: 540,910] | | [removed: 61.1] [added: 62.7] | ​ |

| Sales, general and administrative | ​ | | [removed: 515,007] [added: 401,575] | | [removed: 59.7] [added: 33.7] | ​ | ​ | | [removed: 307,286] [added: 515,007] | | [removed: 45.1] [added: 59.7] | ​ |

| Research and development | ​ | | [removed: 194,026] [added: 233,810] | | [removed: 22.5] [added: 19.7] | ​ | ​ | | [removed: 123,195] [added: 194,026] | | [removed: 18.1] [added: 22.5] | ​ |

| Total operating expenses | ​ | | [removed: 709,033] [added: 635,385] | | [removed: 82.2] [added: 53.4] | ​ | ​ | | [removed: 430,481] [added: 709,033] | | [removed: 63.2] [added: 82.2] | ​ |

| [removed: Loss] [added: Income (loss)] from operations | ​ | | [removed: (168,123)] [added: 93,253] | | [removed: (19.5)] [added: 7.8] | ​ | ​ | | [removed: (14,150)] [added: (168,123)] | | [removed: (2.1)] [added: (19.5)] | ​ |

| Interest and other income, net | ​ | | [removed: 26,748] [added: 103,265] | | [removed: 3.1] [added: 8.7] | ​ | ​ | | [removed: 7,859] [added: 26,748] | | [removed: 1.1] [added: 3.1] | ​ |

| [removed: Loss] [added: Income (loss)] before provision for income taxes | ​ | | [removed: (141,375)] [added: 196,518] | | [removed: (16.4)] [added: 16.5] | ​ | ​ | | [removed: (6,291)] [added: (141,375)] | | [removed: (1.0)] [added: (16.4)] | ​ |

| [removed: Benefit from] [added: Provision for (benefit from)] income taxes | ​ | | [removed: (81,357)] [added: 49,379] | | [removed: (9.4)] [added: 4.1] | ​ | ​ | | [removed: (4,567)] [added: (81,357)] | | [removed: (0.7)] [added: (9.4)] | ​ |

| Net [removed: loss] [added: income (loss)] | | $ | [removed: (60,018)] [added: 147,139] | | [removed: (7.0)] [added: 12.4] | % | ​ | $ | [removed: (1,724)] [added: (60,018)] | | [removed: (0.3)] [added: (7.0)] | % |

| United States | | $ | [removed: 686,914] [added: 987,975] | | [removed: 80] [added: 83] | % | ​ | $ | [removed: 535,079] [added: 686,914] | | [removed: 79] [added: 80] | % |

| Other Countries | ​ | | [removed: 176,467] [added: 201,960] | | [removed: 20] [added: 17] | ​ | ​ | | [removed: 145,924] [added: 176,467] | | [removed: 21] [added: 20] | ​ |

| Total | ​ | $ | [removed: 863,381] [added: 1,189,935] | | 100 | % | ​ | $ | [removed: 681,003] [added: 863,381] | | 100 | % |

[removed: Our operations are comprised of two reportable segments:] [added: | | ● | The “TASER” segment includes] the manufacture and sale of CEDs, batteries, accessories and extended warranties and other products and [removed: services (collectively, the “TASER” segment); and software and sensors, which includes the sale of devices, wearables, applications, cloud and mobile products, and services (collectively, the "Software and Sensors" segment).][added: services; |]

[removed: In the TASER segment, service] [added: | | o | Service] revenue [added: in this segment] also includes digital subscription training [removed: content.][added: content, VR training content, TASER Evidence.com, and other professional services tied to TASER and VR deployments. |]

[removed: In the] [added: |] Software and Sensors [removed: segment, service revenue also][added: segment | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |]

[added: | | o | “Axon Cloud revenue”] includes [removed: other] recurring cloud-hosted software [removed: revenue and] [added: revenue,] related [added: non-recurring] professional [removed: services.][added: services, and certain software, including on-premise licenses. |]

[removed: Collectively, this revenue is sometimes referred to as "Axon Cloud revenue." Revenue from our “products” in the Software and Sensors segment are generally from sales of sensors, including on-officer body cameras, Axon Fleet cameras, other hardware sensors, warranties on sensors, and other products, and is sometimes referred to as "Sensors and Other revenue."] Within the Software and Sensors segment, we include only revenues and costs attributable to that segment which costs include: costs of sales for both products and services, direct labor, and product management and R&D for products included, or to be included, within the Software and Sensors segment.

For the Years Ended December 31, [removed: 2021] [added: 2022] and [removed: 2020][added: 2021]

Net sales by product line were as follows for the years ended December 31, [removed: 2021] [added: 2022] and [removed: 2020] [added: 2021] (dollars in thousands):

| ​ | ​ | [removed: 2021] [added: 2022] | | | | ​ | [removed: 2020] [added: 2021] | | | | ​ | Change | | ​ | Change | |

| Axon Evidence and cloud services | ​ | | [removed: 9,159] [added: 18,752] | | [removed: 1.1] [added: 1.6] | ​ | | [removed: 2,935] [added: 9,159] | | [removed: 0.4] [added: 1.1] | ​ | | [removed: 6,224] [added: 9,593] | | [removed: 212.1] [added: 104.7] | ​ |

| Axon Evidence and cloud services | ​ | | [removed: 246,005] [added: 371,889] | | [removed: 28.5] [added: 31.2] | ​ | | [removed: 176,797] [added: 246,005] | | [removed: 26.0] [added: 28.5] | ​ | | [removed: 69,208] [added: 125,884] | | [removed: 39.1] [added: 51.2] | ​ |

| ​ | | [removed: 2021] [added: 2022] | | [removed: 2020] [added: 2021] | | Change | | Change | |

| TASER Consumer devices | | [removed: 26,958] [added: 23,223] | | [removed: 33,158] [added: 26,958] | | [removed: (6,200)] [added: (3,735)] | | [removed: (18.7)] [added: (13.9)] | [removed: %] [added: ​] |

Net sales for the TASER segment increased [removed: $70.4] [added: $94.6] million, or [removed: 19.2%,] [added: 21.7%,] primarily as a result of an increase of [removed: $37.6] [added: $89.0] million in [removed: cartridge revenue] [added: TASER 7 devices] and a [removed: $28.4] [added: $28.8] million increase in [removed: TASER 7 devices.][added: cartridge revenue.]

We continue to see a shift to purchases of [removed: our latest generation device,] TASER [removed: 7,] [added: 7] from legacy [removed: devices, especially X26P] devices.

Net sales for the Software and Sensors segment increased [removed: $112.0] [added: $231.9] million, or [removed: 35.6%.][added: 54.4%.]

Revenue from Axon Evidence and cloud services increased [removed: $69.2] [added: $125.9] million as we continued to add users [removed: and associated devices] to our network during the year ended December 31, [removed: 2021.][added: 2022.]

The increase in the aggregate number of users and devices also resulted in increased extended warranty revenues of [removed: $9.3] [added: $16.1] million.

Axon's product suite includes TASER energy devices, body-worn cameras, in-car cameras, cloud-hosted digital evidence management solutions, productivity software and real-time operations capabilities.

Our financial strategy is to build highly recurring, highly profitable businesses.

Axon products are generally cloud-connected, designed to drive better outcomes and customer experiences, and sold via mutually reinforcing integrated bundles.

Axon’s operations comprise two reportable segments:

| | 1. | Software and Sensors: We develop, manufacture and sell 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. Our software offerings also support productivity and real-time operations. |

| | 2. | TASER: Axon is the market leader in the development, manufacture and sale of CEDs, which we sell under our brand name, TASER. |

Some of our products and services are sold on a standalone basis.

These sales may include payments for upfront hardware and services, as well as payments for hardware and services to be provided by us at a future date.

Gross margin dollars increased by $187.7 million, but decreased as a percentage of revenue compared to 2021, reflecting higher labor and freight costs.

Operating expenses decreased $73.6 million, reflecting a decrease of $195.9 million in stock-based compensation expense primarily related to the CEO Performance Award and XSPP, partially offset by an increase in salaries and bonus expense, and increases in travel and commissions expense.

For the year ended December 31, 2022, we recorded net income of $147.1 million, which reflected net unrealized gains of $131.9 million related to observable price changes for our existing investments and related warrants and an unrealized loss of $32.9 million on market securities related to our investment in Cellebrite DI Ltd (“CLBT”), compared to a net loss of $60.0 million for the prior year.

| ​ | ​ | 2022 | | | | | ​ | 2021 | | | | |

| ​ | ​ | 2022 | | | | ​ | ​ | 2021 | | | | |

International revenue increased in 2022, driven by strength in our Asia-Pacific (“APAC”) region, but decreased as a percentage of total revenue compared to 2021.

Our operations are comprised of two reportable segments.

| | ● | The "Software and Sensors" segment includes software and sensors, which includes the sale of devices, wearables, applications, cloud and mobile products, and services. |

| | o | “Sensors and Other revenue” is referred to as revenue from our “products” in the Software and Sensors segment, which is generally from the sales of sensors, including on-officer body cameras, Axon Fleet cameras, other hardware sensors, warranties on sensors, and other products. |

Sales, general and administrative expenses are reported on a consolidated basis.

| TASER 7 | ​ | $ | 224,905 | ​ | 18.9 | % | $ | 135,906 | | 15.7 | % | $ | 88,999 | | 65.5 | % |

| TASER X26P | ​ | | 33,725 | | 2.8 | ​ | | 40,629 | | 4.7 | ​ | | (6,904) | | (17.0) | ​ |

| TASER X2 | ​ | | 24,068 | | 2.0 | ​ | | 58,081 | | 6.7 | ​ | | (34,013) | | (58.6) | ​ |

| TASER Consumer devices | ​ | | 6,420 | | 0.5 | ​ | | 7,132 | | 0.8 | ​ | | (712) | | (10.0) | ​ |

| Cartridges | ​ | | 181,686 | | 15.3 | ​ | | 152,842 | | 17.8 | ​ | | 28,844 | | 18.9 | ​ |

| Extended warranties | ​ | | 29,008 | | 2.5 | ​ | | 24,125 | | 2.8 | ​ | | 4,883 | | 20.2 | ​ |

| Other | ​ | | 13,002 | | 1.1 | ​ | | 9,053 | | 1.0 | ​ | | 3,949 | | 43.6 | ​ |

| TASER segment | ​ | | 531,566 | | 44.7 | ​ | | 436,927 | | 50.6 | ​ | | 94,639 | | 21.7 | ​ |

| Axon Body | ​ | | 124,164 | | 10.4 | ​ | | 75,484 | | 8.8 | ​ | | 48,680 | | 64.5 | ​ |

| Axon Flex | ​ | | 3,031 | | 0.3 | ​ | | 4,155 | | 0.5 | ​ | | (1,124) | | (27.1) | ​ |

| Axon Fleet | ​ | | 63,017 | | 5.3 | ​ | | 24,319 | | 2.8 | ​ | | 38,698 | | 159.1 | ​ |

| Axon Dock | ​ | | 30,086 | | 2.5 | ​ | | 24,441 | | 2.8 | ​ | | 5,645 | | 23.1 | ​ |

| Extended warranties | ​ | | 49,765 | | 4.2 | ​ | | 33,686 | | 3.9 | ​ | | 16,079 | | 47.7 | ​ |

| Other | ​ | | 16,417 | | 1.4 | ​ | | 18,364 | | 2.1 | ​ | | (1,947) | | (10.6) | ​ |

| Software and Sensors segment | ​ | | 658,369 | | 55.3 | ​ | | 426,454 | | 49.4 | ​ | | 231,915 | | 54.4 | ​ |

| Total net sales | ​ | $ | 1,189,935 | | 100.0 | % | $ | 863,381 | | 100.0 | % | $ | 326,554 | | 37.8 | % |

| TASER 7 | | 139,217 | | 90,348 | | 48,869 | | 54.1 | % |

| TASER X26P | | 22,651 | | 30,083 | | (7,432) | | (24.7) | ​ |

| TASER X2 | | 13,927 | | 38,620 | | (24,693) | | (63.9) | ​ |

| Cartridges | | 5,635,369 | | 4,945,927 | | 689,442 | | 13.9 | ​ |

| Axon Body | | 253,501 | | 181,663 | | 71,838 | | 39.5 | ​ |

| Axon Flex | | 6,018 | | 7,828 | | (1,810) | | (23.1) | ​ |

Axon is a global network of devices, apps and people that helps public safety personnel become smarter and safer.

With a mission of protecting life, our technologies give law enforcement the confidence, focus and time they need to protect their communities.

Our products impact every aspect of a public safety officer’s day-to-day experience with the goal of helping everyone get home safe.

The higher loss from operations was primarily the result of increased stock compensation expense for our CEO Performance Award and XSPP.

In addition, operating expenses were higher in 2021 primarily due to an increase in headcount; these other cost increases were largely offset by higher revenue.

2022 Outlook

For the year ending December 31, 2022, we expect revenue of approximately $1 billion.

We anticipate capital expenditures of approximately $135 million to $160 million in 2022, including approximately $85 million for development of our manufacturing facility and campus in Scottsdale, Arizona, approximately $40 million to support capacity expansion and automation of TASER devices, and the remainder on additional investments to support our continued growth.

COVID-19

The COVID-19 pandemic has adversely affected workforces, economies, and financial markets globally, and led to an economic downturn.

As an essential provider of products and services for law enforcement and other first responders, we remain focused on protecting the health and wellbeing of our employees while assuring the continuity of our business operations.

We have taken a number of actions in response to the pandemic:

_Employee safety and manufacturing:_

| | ● | We continue to allow for a remote work model for the majority of our office staff, with medical screening for any employees who do work in our offices; and |

| | ● | We hosted several onsite vaccination clinics for our employees and their family members. |

_Supply chain:_

| | ● | We previously took steps to diversify our supply chain and global manufacturing footprint, which have positioned us well to manage through the pandemic. |

| | ● | We have proactively built up a safety stock of raw and finished goods inventory aligned to our strategic model to help meet strong product demand while also preparing us to stagger factory work schedules. We continue to adjust strategic inventory levels based on areas of risk to mitigate potential supply disruptions. |

| | ● | In light of our broad geographic supplier base both domestic and international, we are continuously monitoring our supply chain to manage through potential impacts, identifying alternate sources as well as shipping / logistic sources and working with foreign regulators to ensure that our suppliers can provide parts. |

_Shareholder engagement:_

| | ● | We have continued our shareholder engagement in a primarily virtual format. |

| ​ | ​ | 2021 | | | | | ​ | 2020 | | | | |

| ​ | ​ | 2021 | | | | ​ | ​ | 2020 | | | | |

International revenue in 2021 increased compared to 2020, driven by strength in all of our international regions, particularly in the Americas and EMEA regions.

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| TASER 7 | ​ | $ | 135,906 | | 15.7 | % | $ | 107,506 | | 15.8 | % | $ | 28,400 | | 26.4 | % |

| TASER X26P | ​ | | 40,629 | | 4.7 | ​ | | 41,724 | | 6.1 | ​ | | (1,095) | | (2.6) | ​ |

| TASER X2 | ​ | | 58,081 | | 6.7 | ​ | | 60,107 | | 8.8 | ​ | | (2,026) | | (3.4) | ​ |

| TASER Consumer devices | ​ | | 7,132 | | 0.8 | ​ | | 9,407 | | 1.4 | ​ | | (2,275) | | (24.2) | ​ |

| Cartridges | ​ | | 152,842 | | 17.8 | ​ | | 115,193 | | 16.9 | ​ | | 37,649 | | 32.7 | ​ |

| Extended warranties | ​ | | 24,125 | | 2.8 | ​ | | 20,754 | | 3.0 | ​ | | 3,371 | | 16.2 | ​ |

| Other | ​ | | 9,053 | | 1.0 | ​ | | 8,926 | | 1.3 | ​ | | 127 | | 1.4 | ​ |

| TASER segment | ​ | | 436,927 | | 50.6 | ​ | | 366,552 | | 53.7 | ​ | | 70,375 | | 19.2 | ​ |

| Axon Body | ​ | | 75,484 | | 8.8 | ​ | | 57,150 | | 8.4 | ​ | | 18,334 | | 32.1 | ​ |

| Axon Flex | ​ | | 4,155 | | 0.5 | ​ | | 4,082 | | 0.6 | ​ | | 73 | | 1.8 | ​ |

| Axon Fleet | ​ | | 24,319 | | 2.8 | ​ | | 20,108 | | 3.0 | ​ | | 4,211 | | 20.9 | ​ |

| Axon Dock | ​ | | 24,441 | | 2.8 | ​ | | 19,723 | | 2.9 | ​ | | 4,718 | | 23.9 | ​ |

| Extended warranties | ​ | | 33,686 | | 3.9 | ​ | | 24,408 | | 3.6 | ​ | | 9,278 | | 38.0 | ​ |

| Other | ​ | | 18,364 | | 2.1 | ​ | | 12,183 | | 1.8 | ​ | | 6,181 | | 50.7 | ​ |

[removed: The credit-related impairment] amount is recognized in the consolidated statements of operations.

Based on investment positions as of December 31, [removed: 2021,] [added: 2022,] a hypothetical 100 basis point increase in interest rates across all maturities would result in a [removed: $0.5] [added: $3.4] million decline in the fair market value of the portfolio.

Additionally, we have access to a [removed: $50.0] [added: $200.0] million line of credit borrowing facility which bears interest at [removed: LIBOR plus 1.0] [added: SOFR 1.25] to [removed: 1.5%] [added: 1.75%] per year determined in accordance with a pricing grid based on our [removed: funded debt to EBITDA] [added: net leverage ratio and consolidated interest coverage] ratio.

Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit, which totaled [removed: $6.1] [added: $7.0] million at December 31, [removed: 2021.][added: 2022.]

At December 31, [removed: 2021,] [added: 2022,] there was no amount outstanding under the line of credit, and the available borrowing under the line of credit was [removed: $43.9] [added: $193.0] million.

The credit-related impairment

Axon Enterprise, Inc. may be referred to as “the Company,” “Axon,” “we,” or “our.” [removed: We were incorporated in Arizona in September 1993 as ICER Corporation.]

Our [added: physical] headquarters in Scottsdale, Arizona houses [removed: our] [added: some] executive management, sales, marketing, certain engineering, manufacturing, finance and other administrative support functions.

[removed: Our global software hub is located in Seattle, Washington, and we] [added: We] also have [removed: subsidiaries] [added: subsidiaries,] and [removed: / or] [added: in some cases] offices located in Australia, Canada, Finland, [added: France,] Germany, Hong Kong, India, Italy, the Netherlands, [added: Spain,] the United Kingdom, and Vietnam.

[removed: We fulfill this mission through developing] [added: Our] hardware and software [removed: products that] [added: solutions] advance our long-term strategic [removed: goals] [added: vision] of a) obsoleting the bullet, b) reducing social conflict, c) enabling a fair and effective justice system, and d) building for racial equity, diversity, and inclusion.

| | [removed: 1.] [added: 2.] | TASER: Axon is the market leader in the development, manufacture and sale of conducted energy devices ("CEDs"), which we sell under our brand name, TASER. |

| | [removed: 2.] [added: 1.] | Software and Sensors: We develop, manufacture and sell 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. [added: Our software offerings also support productivity and real-time operations.] |

Further information about our reportable segments and sales by geographic region is included in Notes [removed: 1] [added: 1, 2] and [removed: 19] [added: 20] of the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

| | [removed: 1.] [added: ●] | TASER: We develop smart devices, tools and services that support public safety officers in de-escalating situations, avoiding or minimizing use of force and [removed: aid consumers in] [added: aiding consumer] personal protection. These tools include TASER devices, virtual reality training services and consumer devices. Research has shown that TASER devices are the most effective less-than-lethal force option, with the lowest likelihood of injury to officers and assailants. Since our inception in 1993, TASER devices have been [removed: adopted by a majority of U.S. police departments and are used daily to help keep communities safe. We see opportunity to create more effective and reliable personal protection for private individuals, and, thus, our consumer business is a growing area of investment. Our market penetration among consumers is virtually nil.] |

| | [removed: 2.] [added: ●] | Sensors: Axon devices address many needs, including transparency, real-time situational awareness, and capturing evidence accurately and integrating with software workflows. Product categories within sensors include Axon body cameras, Axon Fleet in-car systems, and other devices that work with our software. |

| | [removed: 3.] [added: ●] | Software: Axon is building a suite of cloud-based, software-as-a-service (“SaaS”) solutions that integrate with our sensors and TASER devices to benefit customers and drive annual recurring revenue, which totaled [removed: $327.5] [added: $473] million(a) as of December 31, [removed: 2021.] [added: 2022.] We have many SaaS solutions, which can best be trisected into three categories: digital evidence management, productivity and real-time operations solutions. Axon Evidence is the world’s largest cloud-hosted public safety data repository of public safety video data and other types of digital evidence. [added: Our productivity suite, which includes Axon Records, is designed to save officers time spent writing reports and doing paperwork. And our real-time operations capabilities, which include Axon Respond, integrates location data, signal alerts and video feeds to provide a complete picture of evolving situations.] |

| | (a) | _Monthly recurring license, integration, warranty, and storage revenue [removed: annualized._] [added: for the year ended December 31, 2022._] |

Axon’s [removed: direct] sales force and strong customer relationships represent key strategic advantages.

No customer represented more than 10% of total net sales for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] or [removed: 2019.][added: 2020.]

Our [removed: primary] [added: largest] customer [removed: market] [added: segment] is U.S. [added: state and local] law enforcement.

The remaining agencies are served via our telesales [removed: team] [added: team,] as well as distributors.

We [removed: previously took] [added: continue to take] steps to diversify our supply chain and global manufacturing footprint, which positioned us well [removed: to manage] [added: managing] through the [removed: COVID-19 pandemic.][added: recent supply chain challenges.]

[removed: However, as] [added: As] we enter [removed: 2022] [added: 2023,] material availability [added: is improving but] still poses real risks to all businesses that manufacture products.

We continue to adjust strategic inventory levels based on areas of risk [removed: (Covid, geopolitical, governmental, etc.)] to mitigate potential supply disruptions.

We provide limited manufacturer’s warranties on our [removed: CEDs and] Axon [removed: devices,] [added: devices] and [added: CEDs, and] customers also have the option to purchase extended warranties.

For additional information about our warranties, refer to Note 1 [removed: to] [added: in] the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

As of December 31, [removed: 2021,] [added: 2022,] we hold [removed: 253] [added: 274] U.S. patents, [removed: 91] [added: 109] U.S. registered trademarks, [removed: 155] [added: 165] international patents, and [removed: 383] [added: 415] international registered trademarks, and also have numerous patent and trademark applications pending.

We have the exclusive rights to many Internet domain names, primarily including [removed: “TASER.com”,] “Axon.com”, [removed: “Axon.net”, “Evidence.com”] [added: “Evidence.com”,] and [removed: “Axon.io.”] [added: “TASER.com.”] We also vigorously protect our intellectual property, including trademarks, patents and trade secrets against third-party infringement.

_TASER for [removed: Law Enforcement, Corrections and Private Security] [added: Professional User] Markets:_ Our CEDs compete with a variety of [removed: other] less-lethal alternatives to firearms, including rubber bullets or rubber baton rounds, [added: such as those made by Combined Systems;] pepper spray, pepper spray projectiles, [removed: mace,] [added: such as those made by Byrna Technologies Inc. (dba Fox Labs), SABRE Corporation, and Mace Security International, Inc.;] traditional stun guns, [added: such as those made by UZI and Jolt;] hand-held remote restraint devices involving a tether, [added: such as the one made by Wrap Technologies Inc.;] laser dazzlers that cause temporary blindness, [added: such as the one made by B.E. Meyers & Co., Inc.;] stun grenades, [added: such as those made by Combined Systems, Inc.;] long-range acoustic devices, [added: such as the one made by Genasys Inc.;] police batons and night [removed: sticks.][added: sticks, such as those made by Monadnock and by Armament Systems and Procedures, Inc. TASER devices offer advanced technology, versatility, portability, effectiveness, built-in accountability systems, and low injury rates, which enable us to compete effectively against other less-lethal alternatives.]

TASER devices also offer connectivity to our cloud network, which allows [added: law enforcement] agencies [added: and other professional users] to more effectively manage their less-lethal programs and automate use-of-force reporting.

[removed: The broader market for personal safety and home defense is far-reaching, and] categories range from threat detection and accountability (dash and doorbell cameras), to home security (home alarms, locks, and response services) to personal defense (firearms, stun guns, TASER devices, pepper spray, tactical flashlights, and personal alarms), to personal tracking and emergency notification mobile applications.

Our competition includes Motorola Solutions, Utility Associates, [removed: Getac,] [added: Getac Technology Corporation,] Panasonic Corp., Reveal Media, [removed: Coban Technologies, L3 Mobile-Vision,] [added: Safe Fleet,] Digital [removed: Ally,] [added: Ally Inc.,] Visual [removed: Labs,] [added: Labs Inc.,] Intrensic, LLC, as well as Safety Vision, [removed: Rekor,] [added: LLC, Rekor Systems Inc.,] and [removed: Genetec.][added: Genetec Inc.]

Our competition includes Motorola Solutions, Panasonic Corp., IBM, Oracle, FotoWare, Vidizmo, [added: LLC,] NICE, [removed: QueTel, OpenText,] [added: QueTel Corporation, OpenText Corporation,] and FileOnQ among others.

We have identified more than 50 software providers, including Motorola Solutions, Tyler Technologies, Central Square Technologies (formerly Superion, TriTech and Aptean), Northrop Grumman, Hexagon AB, Niche Technology Inc., Caliber Public Safety (parent, Harris [removed: Systems USA),] [added: Computer Systems),] Saab, SOMA Global, [removed: RapidDeploy,] [added: RapidDeploy Inc.,] Sopra Steria, [added: Mark43 Inc,] and [removed: Mark 43 Inc. In addition, not all law enforcement agencies use software for report writing — some still use paper.][added: CSI Technology Group.]

Our Respond offering competes both with real-time operations platforms that ingest body camera video feeds, like Motorola’s CommandCentral Aware, Hitachi's Visualization Suite and Genetec's Citigraf as well as platforms that ingest video feeds exclusively from surveillance cameras, like Rave Mobile Safety, [removed: LiveEarth] [added: Live Earth] and Mutualink among others.

[added: However, historical seasonal patterns, municipal] budgets or historical patterns of product introductions should not be considered reliable indicators of our future net sales or financial performance.

We are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including, for example, laws and regulations related to: privacy and data protection, security, retention, and deletion; rights of publicity; content; intellectual property; regulation of [added: certain of] our CEDs as firearms; advertising; marketing; distribution; electronic contracts and other communications; competition; consumer protection; telecommunications; product liability; taxation; labor and employment; economic or other trade prohibitions or sanctions; securities; and online payment services.

[removed: _TASER] [added: _Axon] and [removed: Axon] [added: TASER] Devices_

For our TASER products, we rely on the opinions of the U.S. Bureau of Alcohol, Tobacco, Firearms and [removed: Explosives,] [added: Explosives (“ATF”),] including the determination that a device that does not expel projectiles by the action of an explosive is not classified as a firearm.

_Federal regulation of sales in the U.S.:_ [removed: Our currently offered CEDs] [added: All current CED models, with the exception of TASER 10, which launched in January 2023,] are not firearms regulated by the [removed: U.S. Bureau of Alcohol, Tobacco, Firearms] [added: ATF,] and [removed: Explosives, but] our consumer products are regulated by the U.S. Consumer Product Safety Commission.

There are currently no federal laws restricting sales of our [removed: core] [added: other] currently offered CED products in the U.S.

_Federal regulation of international sales:_ Our CEDs are considered a “crime control” product by the U.S. Department of Commerce [removed: (“DOC”)] [added: (DOC)] for export directly from the U.S. [removed: Consequently, we must] [added: which requires us to] obtain an export license from the DOC for the export of our CED devices from the U.S. to any country other than Canada.

_Federal regulation of foreign national employees:_ Our CED [removed: technology] [added: development and production] is [added: also] considered controlled “technology” by the U.S. DOC and is categorized as a “deemed export” for any foreign national employees exposed to the technology within the U.S. Consequently, we must obtain [removed: an] export licenses from the DOC for any deemed export within the U.S. made to a foreign national employee exposed to the deemed controlled technology.

_State and local regulation:_ Our CEDs are controlled, restricted or, less frequently, prohibited by [removed: a number of] [added: some] state and local governments.

[removed: Some] [added: Additionally, some] cities and municipalities also prohibit private citizen possession or use of our CED products.

_International regulation of foreign-based operations:_ We maintain foreign operations in several countries globally for purposes of logistics, sales, [added: general] and [added: administrative services, and] R&D support.

Axon’s mission is to protect life in service of promoting peace, justice and strong institutions.

Our moonshot goal is to cut gun-related deaths between police and the public in the United States by 50 percent before 2033.

As a technology leader in global public safety, Axon is building the public safety operating system of the future by integrating a suite of hardware devices and cloud software solutions that lead modern policing.

Axon's suite includes TASER energy devices, body-worn cameras, in-car cameras, cloud-hosted digital evidence management solutions, productivity software and real-time operations capabilities.

Axon employees are distributed across multiple geographies and report to work via a remote-hybrid model, which leverages both in-person collaboration environments as well as cloud-based software tools that enable remote productivity.

Our other key in-person facilities include Seattle, London and Ho Chi Minh City.

Axon products are generally cloud-connected, designed to drive better outcomes and customer experiences, and sold via mutually reinforcing integrated bundles.

| | | adopted by a majority of U.S. state and local police departments and are used daily to help keep communities safe. Global adoption of TASER devices remains early and we are expanding into new geographies. Axon VR solutions make public safety training more accessible, relevant and affordable — with the goal of using new immersive VR technologies to better prepare officers for real-life situations in the field. |

We think of our core customers as falling into roughly four categories of funding sources: U.S. state and local governments, the U.S. federal government, international government customers, and commercial enterprises.

Additionally, the types of customers who find value in our product offerings are expanding beyond law enforcement to include attorneys, fire and EMS personnel, corrections and the U.S. military.

Axon has a customer relationship with over 95% of state and local law enforcement agencies in the United States.

We are diversifying into new markets by adding new types of customer profiles, or users, and by adding to our core customer base.

In recent years, we have been investing in sales personnel to capture these new markets, and in 2023, we will focus on strategic headcount additions to support key new markets and newer products.

We continue to monitor developments in federal government funding.

Supplier decommitments remain our largest area of risk as we continue to experience this in several areas.

However, we have put programs in place to mitigate this risk.

In addition, not all law enforcement agencies use software for report writing — some still use paper.

Virtual Reality (“VR”) De-Escalation Training for Law Enforcement, Corrections and Private Security Markets: Our VR Training platform competes with several other companies in the space who offer simulation scenarios, including simulated training on the use of both lethal and less-lethal alternatives.

Our competition in this space includes VirTra Inc., Apex Officer, Laser Shot Inc., InVeris Training Solutions Inc., MILO, Ti Training Corp, Adaptive VR Ltd. (AVRT), V-Armed, Street Smarts VR and WRAP Technologies.

Key competitive factors in this market include scale of content library, integration to additional sensors and devices (e.g. haptic suit, TASER), ease of use, visual fidelity and realism, quality of immersion experience (enhanced by capabilities such as eye tracking and speech recognition) and portability.

Leading competitors in the less-than-lethal space include Byrna Technologies, Inc., Salt Supply Co., PepperBall, Mace, SABRE and Vipertek.

The broader market for personal safety and home defense is far-reaching, and

Non-Axon trademarks are property of their respective owners.

See “Item 1A.

Risk Factors – Legal and Compliance Risks - A variety of new and existing laws and/or interpretations could materially and adversely affect our business.”

by FirstNet and other operators.

The TASER 10 is regulated by the ATF under the Gun Control Act of 1968 and is subject to applicable state and local firearms regulations that are jurisdiction-specific.

Axon must maintain a federal firearms license to manufacture and sell the TASER 10, which subjects Axon to periodic compliance inspections by the ATF.

License violations discovered by the ATF can result in fines, penalties, warning letters or license revocation.

Additionally, if we fail to comply with ATF rules and regulations, the ATF may limit our TASER 10 activities or growth, fine us, or ultimately, suspend our ability to produce and sell the TASER 10 product line.

Future products and services may require classifications from the DOC before they may be shipped internationally.

Our inability to obtain DOC export licenses or classifications on a timely basis for sales of our products to our international customers could significantly and adversely affect our international sales.

Although TASER 10 is regulated by the ATF for domestic sales, the U.S. DOC has ruled that the product’s unique propulsion design has no impact on its export classification and that the TASER 10 model’s export classification remains consistent with all other TASER CED models.

Inability to obtain proper licensing could curtail the company’s ability to recruit employees and execute R&D and production related to CED technology.

As of December 31, 2022, Rhode Island is the only state that prohibits the possession of our TASER-branded devices that are not regulated by the ATF.

However, that prohibition was struck down as unconstitutional by a federal court, and new legislation is expected.

However, with the launch of TASER 10 in January 2023, we may need to comply with additional state and local requirements governing the sale of firearms if that device is sold to non-law enforcement customers.

Additionally, certain TASER 10 components are regulated for import into the U.S. by the ATF and are subject to ATF import permits which limits Axon’s ability to source from some suppliers leading to a potential decrease in supply chain agility.

New, or changes in, environmental safety laws, regulations or rules could also lead to increased costs of compliance, including remediations of any discovered issues, and changes to our operations, which may be significant.

Any failures to comply could result in significant expenses, delays or fines.

Axon’s mission is to protect life.

An axon is a nerve fiber that serves as the primary communication link in a nervous system — similarly, we see ourselves as building the nervous system for public safety.

In 2021, we made investments for scale to expand our total addressable market along three axes — introducing new products, selling into new customer market segments, and adding sales channels to new geographic regions.

We believe we are serving a $52 billion total addressable market.

| | ● | What we build - Technologies to assist officers in de-escalating events, devices, digital evidence management systems, productivity software, real-time operations software and services, and virtual reality training services |

| | ● | Who we sell to - State and local law enforcement, U.S. federal civilian and defense agencies, justice and court systems, corrections, fire departments and emergency medical services providers, consumers, and commercial enterprises such as private security firms and transportation providers |

| | ● | Where we deliver – U.S., Asia-Pacific (“APAC”); Europe, the Middle East, and Africa (“EMEA”) and the Americas |

Of the approximately 18,000 law enforcement agencies in the U.S., we have a customer relationship with approximately 17,000.

Axon has dedicated sales representatives for the 1,200 largest agencies, which account for approximately 70% of U.S. law enforcement patrol officers.

In recent years, we have been investing in sales personnel to capture new markets, including the U.S. federal government and military, departments of corrections, the fire and emergency medical services markets, and new geographies outside the U.S. In 2021, we continued to expand our presence in new markets by growing our dedicated sales teams in the Justice and Enterprise markets.

Supplier decommitments remain our largest area of risk and we have seen this practice increase over the course of the pandemic and global supply chain constraints.

TASER devices offer advanced technology, versatility, portability, effectiveness, built-in accountability systems, and low injury rates, which enable us to compete effectively against other less-lethal alternatives.

However, historical seasonal patterns, municipal

As of December 31, 2021, the general public in Hawaii and Rhode Island is prohibited from possessing certain of our TASER-branded devices.

Subsequent to December 31, 2021, Hawaii lifted restrictions on possession related to TASER-branded devices.

The European General Data Protection Regulation ("GDPR") took effect in May 2018 and applies to many of our products and services that provide service in Europe.

The GDPR includes operational requirements for companies that receive or process personal data of residents of the EU.

The GDPR includes significant penalties for non-compliance.

In addition, some countries have passed legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements.

The breakdown of our full-time employees by department was as follows: 215 direct manufacturing employees, 614 research and development employees, 381 administrative and support employees, 452 sales employees, and 486 employees within product support.

In 2021, we broadened our already strong support for our customers and the communities they are sworn to protect.

We added a Vice President of Community Impact to build and lead a team dedicated to listening to

communities, seeking citizen feedback, and keeping them safe and informed on a variety of topics.

In 2020, we launched a company-wide R&D initiative that allowed employees to break from their regular responsibilities and solely focus on developing life-changing solutions to better protect citizens and law enforcement.

Additionally, during the COVID-19 pandemic, we have invested heavily to help ensure the health of our employees.

Through the use of education and awareness, provision of necessary personal protective equipment, and changes to our manufacturing facilities and screening, we strive to make our workplaces a safe place for employees during the workday.

See discussion of litigation in Note [removed: 11] [added: 13] to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K, which discussion is incorporated by reference herein.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

As of June 30, [removed: 2021,] [added: 2022,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $11.4] [added: $6.3] billion based on the closing sale price as reported on The NASDAQ Global Select Market.

The number of shares of the registrant’s common stock outstanding as of February [removed: 18, 2022] [added: 24, 2023] was [removed: 70,931,874.][added: 72,862,227]

Parts of the registrant’s definitive proxy statement for its [removed: 2022] [added: 2023] annual meeting of stockholders to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, [removed: 2021] [added: 2022] are incorporated by reference into Part III of this Form 10-K.

FOR THE YEAR ENDED DECEMBER 31, [removed: 2021][added: 2022]

| [Item 1.](#Item1Business_844260) | [Business](#Item1Business_844260) | ​ | [removed: 4] [added: 6] |

| [Item 1A.](#Item1ARiskFactors_991490) | [Risk Factors](#Item1ARiskFactors_991490) | ​ | [removed: 11] [added: 14] |

| [Item 1B.](#Item1BUnresolvedStaffComments_129436) | [Unresolved Staff Comments](#Item1BUnresolvedStaffComments_129436) | ​ | [removed: 25] [added: 33] |

| [Item 2.](#Item2Properties_797324) | [Properties](#Item2Properties_797324) | ​ | [removed: 25] [added: 33] |

| [Item 3.](#Item3LegalProceedings_457143) | [Legal Proceedings](#Item3LegalProceedings_457143) | ​ | [removed: 25] [added: 34] |

| [Item 4.](#Item4MineSafetyDisclosures_619104) | [Mine Safety Disclosures](#Item4MineSafetyDisclosures_619104) | ​ | [removed: 25] [added: 34] |

| [Item 5.](#Item5MarketforRegistrantsCommonEquityRel) | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Item5MarketforRegistrantsCommonEquityRel) | ​ | [removed: 26] [added: 35] |

| [Item 6.](#Item6SelectedFinancialData_44868) | \[Reserved\] | ​ | [removed: 27] [added: 36] |

| [Item 7.](#Item7ManagementsDiscussionandAnalysisofF) | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Item7ManagementsDiscussionandAnalysisofF) | ​ | [removed: 28] [added: 37] |

| [Item 7A.](#Item7AQuantitativeandQualitativeDisclosu) | [Quantitative and Qualitative Disclosures About Market Risk](#Item7AQuantitativeandQualitativeDisclosu) | ​ | [removed: 46] [added: 53] |

| [Item 8.](#Item8FinancialStatementsandSupplementary) | [Financial Statements and Supplementary Data](#Item8FinancialStatementsandSupplementary) | ​ | [removed: 47] [added: 55] |

| [Item 9.](#Item9ChangesinandDisagreementsWithAccoun) | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](#Item9ChangesinandDisagreementsWithAccoun) | ​ | [removed: 91] [added: 102] |

| [Item 9A.](#Item9AControlsandProcedures_674546) | [Controls and Procedures](#Item9AControlsandProcedures_674546) | ​ | [removed: 91] [added: 102] |

| [Item 9B.](#Item9BOtherInformation_873177) | [Other Information](#Item9BOtherInformation_873177) | ​ | [removed: 93] [added: 106] |

| [Item 9C.](#Item9cDisclosureRegardingForeignJurisdic) | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspection](#Item9cDisclosureRegardingForeignJurisdic) | ​ | [removed: 93] [added: 106] |

| [Item 10.](#Item10DirectorsExecutiveOfficersandCorpo) | [Directors, Executive Officers and Corporate Governance](#Item10DirectorsExecutiveOfficersandCorpo) | ​ | [removed: 93] [added: 106] |

| [Item 11.](#Item11ExecutiveCompensation_353609) | [Executive Compensation](#Item11ExecutiveCompensation_353609) | ​ | [removed: 93] [added: 106] |

| [Item 12.](#Item12SecurityOwnershipofCertainBenefici) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#Item12SecurityOwnershipofCertainBenefici) | ​ | [removed: 93] [added: 106] |

| [Item 13.](#Item13CertainRelationshipsandRelatedTran) | [Certain Relationships and Related Transactions, and Director Independence](#Item13CertainRelationshipsandRelatedTran) | ​ | [removed: 94] [added: 107] |

| [Item 14.](#Item14PrincipalAccountingFeesandServices) | [Principal Accountant Fees and Services](#Item14PrincipalAccountingFeesandServices) | ​ | [removed: 94] [added: 107] |

| [Item 15.](#Item15ExhibitsFinancialStatementSchedule) | [Exhibits, Financial Statement Schedules](#Item15ExhibitsFinancialStatementSchedule) | ​ | [removed: 94] [added: 107] |

| [Item 16.](#Item16Form10KSummary_628319) | [Form 10-K Summary](#Item16Form10KSummary_628319) | ​ | [removed: 96] [added: 109] |

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Risk Factor Summary

The following is only a summary of the principal risks that may materially adversely affect our business, financial condition, results of operations and cash flows.

The following should be read in conjunction with the more complete discussion of the risk factors we face, which are set forth more fully in “Part I.

Item 1A.

Risk Factors.”

Strategic Risks

​

| | ● | If law enforcement agencies do not continue to purchase and use our products and services, our growth prospects, operating results and financial conditions will be adversely affected. |

| --- | --- | --- |

| | ● | If our TASER conducted energy devices (“CEDs”) do not continue to be widely accepted, our growth prospects will be diminished. |

| --- | --- | --- |

| | ● | If we are unable to design, introduce, sell and deploy new products or new product features successfully, our business and financial results could be adversely affected. |

| --- | --- | --- |

| | ● | We face risks associated with rapid technological change and new competing products. |

| --- | --- | --- |

| | ● | Our future success is dependent on our ability to expand sales through direct sales and distributors and our inability to increase direct sales or recruit new distributors would negatively affect our sales. |

| --- | --- | --- |

| | ● | Acquisitions of, or investments in, other companies, products, or technologies could disrupt our business, dilute stockholder value, and adversely affect our operating results. |

| --- | --- | --- |

| | ● | Our failure to retain executive officers, specifically Patrick W. Smith, could adversely impact our business. |

| --- | --- | --- |

Operational Risks

​

| | ● | Unavailability of materials or higher costs could adversely affect our financial results. |

| --- | --- | --- |

| | ● | Material adverse developments in domestic and global economic conditions, or the occurrence of other world events, could materially adversely affect our revenue and results of operations. |

| --- | --- | --- |

| | ● | To the extent demand for our products increases, our future success will be dependent upon our ability to manage our growth and to increase manufacturing production capacity. |

| --- | --- | --- |

| | ● | Delays in product development schedules could adversely affect our revenues and cash flows. |

| --- | --- | --- |

| | ● | We expend significant resources in anticipation of a sale and may receive no revenue in return. |

| --- | --- | --- |

| | ● | Changes in civil forfeiture laws may affect our customers’ ability to purchase our products. |

| --- | --- | --- |

| | ● | Catastrophic events could materially adversely affect our business and/or financial condition. |

| --- | --- | --- |

| | ● | If our security measures or those of our third-party cloud storage providers are breached and unauthorized access is obtained to customers’ data or our data, our network, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities. |

We also lease premises in Phoenix and Scottsdale, Arizona; [added: San Leandro, California;] East Point, Georgia; [removed: Charlotte, North Carolina;] Topsfield, Massachusetts; Seattle and Spokane, Washington; Melbourne and Sydney, Australia; Toronto, Canada; Daventry and London, England; Tampere, Finland; Frankfurt, Germany; [removed: Mumbai,] [added: Delhi,] India; Rome, Italy; Amsterdam, Netherlands; and Ho Chi Minh City, Vietnam.

[removed: In 2020, we purchased] [added: We also own] a parcel of land located in Scottsdale, Arizona on which we intend to [removed: construct] [added: develop] a new [removed: manufacturing and office facility.][added: campus.]

As of December 31, [removed: 2021,] [added: 2022,] there were [removed: 217] [added: 212] holders of record of our common stock.

During the year ended December 31, [removed: 2021,] [added: 2022,] no common shares were purchased under the program.

As of December 31, [removed: 2021,] [added: 2022,] $16.3 million remained available under the plan for future purchases.

The following stock performance graph compares the performance of our common stock to the NASDAQ Composite Index, [removed: S&P 500 Index, and] Russell 2000 [added: Index, Russell Midcap Index, and S&P 500] Index.

The graph covers the period from December 31, [removed: 2016] [added: 2017] to December 31, [removed: 2021.][added: 2022.]

The graph assumes that the value of the investment in our stock and in each index was $100 at December 31, [removed: 2016,] [added: 2017,] and that all dividends were reinvested.

[removed: ][added: ]

| ​ | | [removed: 2016 | | |] 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | [added: | 2022 | |]

| Axon Enterprise, Inc. | ​ | $ | 100.00 | ​ | $ | 165.09 | ​ | $ | 276.53 | ​ | $ | 462.38 | ​ | $ | 592.45 | ​ | $ | 626.08 |

| NASDAQ Composite | ​ | ​ | 100.00 | ​ | ​ | 97.16 | ​ | ​ | 132.81 | ​ | ​ | 192.47 | ​ | ​ | 235.15 | ​ | ​ | 158.65 |

| Russell 2000 | ​ | ​ | 100.00 | ​ | ​ | 88.99 | ​ | ​ | 111.70 | ​ | ​ | 134.00 | ​ | ​ | 153.85 | ​ | ​ | 122.41 |

| Russell Midcap Index | ​ | ​ | 100.00 | ​ | ​ | 90.94 | ​ | ​ | 118.72 | ​ | ​ | 139.02 | ​ | ​ | 170.42 | ​ | ​ | 140.91 |

| S&P 500 | ​ | ​ | 100.00 | ​ | ​ | 95.62 | ​ | ​ | 125.72 | ​ | ​ | 148.85 | ​ | ​ | 191.58 | ​ | ​ | 156.88 |

| Axon Enterprise, Inc. | ​ | $ | 100.00 | ​ | $ | 109.32 | ​ | $ | 180.49 | ​ | $ | 302.31 | ​ | $ | 505.49 | ​ | $ | 647.69 |

| NASDAQ Composite | ​ | ​ | 100.00 | ​ | ​ | 129.64 | ​ | ​ | 125.96 | ​ | ​ | 172.18 | ​ | ​ | 249.51 | ​ | ​ | 304.85 |

| S&P 500 | ​ | ​ | 100.00 | ​ | ​ | 121.83 | ​ | ​ | 116.49 | ​ | ​ | 153.17 | ​ | ​ | 181.35 | ​ | ​ | 233.41 |

| Russell 2000 | ​ | ​ | 100.00 | ​ | ​ | 114.65 | ​ | ​ | 102.02 | ​ | ​ | 128.06 | ​ | ​ | 153.62 | ​ | ​ | 176.39 |

| [Consolidated Balance Sheets as of December 31, [removed: 2021] [added: 2022] and [removed: 2020](#CONSOLIDATEDBALANCESHEETS_305970)] [added: 2021](#CONSOLIDATEDBALANCESHEETS_305970)] | ​ | [removed: 48] [added: 56] |

| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCOM)] [added: 2020](#CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCOM)] | ​ | [removed: 49] [added: 57] |

| [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUI)] [added: 2020](#CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUI)] | ​ | [removed: 50] [added: 58] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_558214)] [added: 2020](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_558214)] | ​ | [removed: 51] [added: 59] |

| [Notes to Consolidated Financial Statements](#a1OrganizationandSummaryofSignificantAcc) | ​ | [removed: 52] [added: 60] |

| [Report of Grant Thornton LLP, Independent Registered Public Accounting Firm](#REPORTOFINDEPENDENTREGISTEREDPUBLICACCOU) (PCAOB ID No. 248) | ​ | [removed: 89] [added: 100] |

| ​ | [removed: ​] | [added: 2022 | | |] 2021 | | ​ | 2020 | |

| Cash and cash equivalents | ​ | $ | [added: 353,684 | ​ | $ |] 356,332 | ​ | $ | 155,440 |

| Marketable securities | ​ | ​ | [removed: 72,180] [added: 39,240] | ​ | ​ | [removed: —] [added: 72,180] |

| Short-term investments | ​ | | [removed: 14,510] [added: 581,769] | ​ | | [removed: 406,525] [added: 14,510] |

| Accounts and notes receivable, net of allowance of [removed: $2,203] [added: $2,176] and [removed: $2,105] [added: $2,203] as of December 31, [removed: 2021] [added: 2022] and December 31, [removed: 2020] [added: 2021,] respectively | ​ | | [removed: 320,819] [added: 358,190] | ​ | | [removed: 229,201] [added: 320,819] |

| Contract assets, net | ​ | | [removed: 180,421] [added: 196,902] | ​ | | [removed: 63,945] [added: 180,421] |

| [removed: Inventory, net] [added: Inventory] | ​ | | [removed: 108,688] [added: 202,471] | ​ | | [removed: 89,958] [added: 108,688] |

| Prepaid expenses and other current assets | ​ | | [removed: 56,540] [added: 73,022] | ​ | | [removed: 36,883] [added: 56,540] |

| Total current assets | ​ | | [removed: 1,109,490] [added: 1,805,278] | ​ | | [removed: 981,952] [added: 1,109,490] |

| Property and equipment, net | ​ | | [removed: 138,457] [added: 169,843] | ​ | | [removed: 105,494] [added: 138,457] |

| Deferred tax assets, net | ​ | | [removed: 127,193] [added: 156,866] | ​ | | [removed: 45,770] [added: 127,193] |

| Intangible assets, net | ​ | | [removed: 15,470] [added: 12,158] | ​ | | [removed: 9,448] [added: 15,470] |

| Goodwill | ​ | | [removed: 43,592] [added: 44,983] | ​ | | [removed: 25,205] [added: 43,592] |

| Long-term investments | ​ | | [removed: 31,232] [added: 156,207] | ​ | | [removed: 90,681] [added: 31,232] |

| Long-term notes receivable, net | ​ | | [removed: 11,256] [added: 5,210] | ​ | | [removed: 22,457] [added: 11,256] |

| Long-term contract assets, net | ​ | ​ | [removed: 29,753] [added: 45,170] | ​ | ​ | [removed: 20,099] [added: 29,753] |

| Strategic investments | ​ | ​ | [removed: 83,520] [added: 296,563] | ​ | ​ | [removed: 11,711] [added: 83,520] |

| Other long-term assets | ​ | | [removed: 98,247] [added: 159,616] | ​ | | [removed: 68,206] [added: 98,247] |

| Total assets | ​ | $ | [removed: 1,688,210] [added: 2,851,894] | ​ | $ | [removed: 1,381,023] [added: 1,688,210] |

| Accounts payable | ​ | $ | [removed: 32,220] [added: 59,918] | ​ | $ | [removed: 24,142] [added: 32,220] |

| Accrued liabilities | ​ | | [removed: 103,707] [added: 155,934] | ​ | | [removed: 59,843] [added: 103,707] |

| Current portion of deferred revenue | ​ | | [removed: 265,591] [added: 360,037] | ​ | | [removed: 163,959] [added: 265,591] |

| Customer deposits | ​ | | [removed: 10,463] [added: 20,399] | ​ | | [removed: 2,956] [added: 10,463] |

| Other current liabilities | ​ | | [removed: 6,540] [added: 6,358] | ​ | | [removed: 5,431] [added: 6,540] |

| Total current liabilities | ​ | | [removed: 418,521] [added: 602,646] | ​ | | [removed: 256,331] [added: 418,521] |

| Deferred revenue, net of current portion | ​ | | [removed: 185,721] [added: 248,003] | ​ | | [removed: 111,222] [added: 185,721] |

| Liability for unrecognized tax benefits | ​ | | [removed: 3,797] [added: 10,745] | ​ | | [removed: 4,503] [added: 3,797] |

| Long-term deferred compensation | ​ | | [removed: 5,679] [added: 6,285] | ​ | | [removed: 4,732] [added: 5,679] |

| Deferred tax [removed: liabilities,] [added: liability,] net | ​ | ​ | [removed: 811] [added: 1] | ​ | ​ | [removed: 649] [added: 811] |

| Other long-term liabilities | ​ | | [removed: 25,832] [added: 4,613] | ​ | | [removed: 27,331] [added: 5,392] |

| Total liabilities | ​ | | [removed: 640,361] [added: 1,583,403] | ​ | | [removed: 404,768] [added: 640,361] |

| Commitments and contingencies (Note [removed: 11)] [added: 13)] | ​ | | | ​ | | |

| Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, [removed: 2021] [added: 2022] and December 31, [removed: 2020,] [added: 2021,] respectively | ​ | | — | ​ | | — |

| Common stock, $0.00001 par value; 200,000,000 shares authorized; [removed: 70,896,856] [added: 71,474,581] and [removed: 63,766,555] [added: 70,896,856] shares issued and outstanding as of December 31, [removed: 2021] [added: 2022] and December 31, [removed: 2020,] [added: 2021,] respectively | ​ | | 1 | ​ | | 1 |

| ​ | ​ | 2022 | | ​ | 2021 | |

| Long-term lease liabilities | ​ | | 37,143 | ​ | | 20,440 |

| Convertible notes, net | ​ | ​ | 673,967 | ​ | ​ | \- |

| Net income (loss) | ​ | $ | 147,139 | ​ | $ | (60,018) | ​ | $ | (1,724) |

| Issuance of common stock | ​ | — | ​ | ​ | — | ​ | ​ | (74) | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (74) |

| Tax benefit related to convertible note hedge | ​ | — | ​ | ​ | — | ​ | ​ | 48,858 | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 48,858 |

| Purchase of convertible note hedge | ​ | — | ​ | ​ | — | ​ | ​ | (194,994) | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (194,994) |

| Issuance of warrants | ​ | — | ​ | ​ | — | ​ | ​ | 124,269 | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 124,269 |

| Other comprehensive loss, net | | — | ​ | | — | ​ | | — | | — | ​ | | — | ​ | | — | ​ | | (5,862) | ​ | ​ | (5,862) |

| Balance, December 31, 2022 | | 71,474,581 | ​ | $ | 1 | ​ | $ | 1,174,594 | | 20,220,227 | ​ | $ | (155,947) | ​ | $ | 257,022 | ​ | $ | (7,179) | ​ | $ | 1,268,491 |

| Net income (loss) | ​ | $ | 147,139 | ​ | $ | (60,018) | ​ | $ | (1,724) |

| Amortization of issuance cost | ​ | ​ | 198 | ​ | ​ | — | ​ | ​ | — |

| Coupon interest expense | ​ | ​ | 211 | ​ | ​ | — | ​ | ​ | — |

| Purchase accounting adjustments to goodwill | ​ | ​ | 58 | ​ | ​ | — | ​ | ​ | — |

| Exercise of warrants of strategic investments | ​ | ​ | (6,555) | ​ | ​ | — | ​ | ​ | — |

| Net proceeds from issuance of convertible senior notes | ​ | | 673,769 | ​ | | — | ​ | | — |

| Proceeds from issuance of warrants | ​ | ​ | 124,269 | ​ | ​ | — | ​ | | — |

| Purchase of convertible note hedge | ​ | ​ | (194,994) | ​ | ​ | — | ​ | | — |

Our mission is to protect life in service of promoting peace, justice and strong institutions.

Cash, cash equivalents and investments include cash, money market funds, certificates of deposit, commercial paper, corporate bonds, term deposits, U.S. Government bonds, municipal bonds, agency bonds, U.S. Treasury bills, and U.S. Treasury inflation-protected securities.

We do not intend to sell

During the year ended December 31, 2022, we recorded $5.3 million of impairment charges.

Of this total, $3.3 million related to the cease-use of a portion of our Seattle office.

An additional $1.4 million related to the decision to slow pacing on construction of our new Scottsdale, Arizona campus.

During the year ended December 31, 2022, these charges were included in sales, general and administrative expense, except for $2.7 million related to the Seattle office lease cease-use, which was recorded in research and development (“R&D”), in the accompanying consolidated statements of operations.

We enter into contracts that can

The Tax Cuts and Jobs Act of 2017 contains a provision which subjects a U.S. parent of a foreign subsidiary to current U.S. tax on its global intangible low-taxed income (“GILTI”).

GILTI is eligible for a deduction which lowers the effective tax rate on GILTI to 10.5% for calendar years 2018 through 2025 and 13.125% after 2025.

We report the tax impact of GILTI as a period cost when incurred.

Accordingly, we do not provide deferred taxes for basis differences expected to reverse as GILTI.

We categorize each of our fair value measurements in

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 8.

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 December 31, 2022 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.

In the Software and Sensors segment, service revenue also includes

other recurring cloud-hosted software revenue and related professional services.

Collectively, this revenue is sometimes referred to as "Axon Cloud revenue."

The effects of outstanding stock options, unvested restricted stock units, our 2027 convertible senior notes (the “Notes” or “2027 Notes”), and warrants to acquire the number of 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.

| Net income (loss) | ​ | $ | 147,139 | ​ | $ | (60,018) | ​ | $ | (1,724) |

| ​ | ​ | *​* | | ​ | ​ | ​ |

| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance, December 31, 2018 | | 58,810,637 | ​ | $ | 1 | ​ | $ | 453,400 | | 20,220,227 | ​ | $ | (155,947) | ​ | $ | 171,383 | ​ | $ | (1,513) | ​ | $ | 467,324 |

Our core mission is to protect life.

We fulfill that mission through developing hardware and software products that advance the long term objectives of a) obsoleting the bullet, b) reducing social conflict, and c) enabling a fair and effective justice system.

During the quarter ended December 31, 2021, upon the sale of a portion of our held-to-maturity security portfolio, we reclassified all remaining held-to-maturity securities to available-for-sale.

We do not anticipate using the held-to-maturity classification in the future.

The transfers to available-for-sale were made as a result of a change in management’s objectives with respect to its investment portfolio, which was implemented in the fourth quarter.

is made.

Additionally, we recognized impairment charges totaling $0.5 million related to improvements and remodeling of certain of our offices.

Both charges were included in sales, general and administrative expense in the accompanying consolidated statements of operations.

During the year ended December 31, 2019, we abandoned certain capitalized software related to implementation work on an enterprise resource planning system conversion, resulting in an impairment charge of $1.3 million, and certain planning and site development activities related to our planned new headquarters, resulting in an impairment charge of $0.7 million, both of which were included in sales, general and administrative expense in the accompanying consolidated statements of operations and comprehensive income.

As of December 31, 2021, management estimated that the fair value of the investments equaled the carrying value.

For performance-based

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes.

In January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) – Clarifying the Interactions Between Topic 321, Topic 323, and Topic 815 (a Consensus of the Emerging Issues Task Force).

The guidance clarifies the interaction between ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities and the ASU on equity method investments.

ASU 2016-01 provides companies with an alternative to measure certain equity securities without a readily determinable fair value at cost, minus impairment, if any, unless an observable transaction for an identical or similar security occurs.

ASU 2020-01 clarifies that for purposes of applying the Topic 321 measurement alternative, an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting under Topic 323, immediately before applying or upon discontinuing the equity method.

In addition, this new ASU provides direction that a company should not consider whether the underlying securities would be accounted for under the equity method or the fair value option when it is determining the accounting for certain forward contracts and purchased options, upon either settlement or exercise.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The guidance improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and certain inconsistencies

in application.

Under current GAAP, an acquirer generally recognizes contract assets acquired and liabilities assumed in a business combination at fair value on the acquisition date.

The amendments in this update require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606 as if it had originated the contracts.

Early adoption of this ASU effective October 1, 2021 did not have a material impact on our consolidated financial statements.

Risks and Uncertainties

COVID-19 related risks have had and continue to have an impact on our operations.

If our backup and mitigation plans are not sufficient to minimize business disruption, our financial results could be adversely affected.

We are continuously monitoring our operations and intend to take appropriate actions to mitigate the risks arising from the COVID-19 pandemic, but there can be no assurances that we will be successful in doing so.

| TASER 7 | ​ | $ | 56,652 | ​ | $ | — | ​ | $ | 56,652 |

| TASER X2 | ​ | | 55,920 | ​ | | — | ​ | | 55,920 |

| Cartridges | ​ | | 85,987 | ​ | | — | ​ | | 85,987 |

| Axon Body | ​ | | — | ​ | | 44,039 | ​ | | 44,039 |

| Axon Evidence and cloud services | ​ | | 704 | ​ | | 130,265 | ​ | | 130,969 |

| Extended warranties | ​ | | 18,074 | ​ | | 19,188 | ​ | | 37,262 |

| Other | ​ | | 7,711 | ​ | | 13,148 | ​ | | 20,859 |

| Total | ​ | $ | 281,661 | ​ | $ | 249,199 | ​ | $ | 530,860 |

| ​ | ​ | | 44,432 | ​ | | 22,903 | ​ | | 67,335 | ​ | | 25,561 | ​ | | 21,978 | ​ | | 47,539 |

Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that as of December 31, [removed: 2021] [added: 2022] our disclosure controls and procedures were [removed: effective.][added: not effective because of the material weakness in our internal control over financial reporting described below.]

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) [added: or 15d-15(f)] under the Exchange Act).

Management has assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2021] [added: 2022] based on criteria [removed: set forth] [added: established] in [removed: _Internal Control - Integrated Framework_] [added: Internal Control-Integrated Framework (2013)] issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission (2013 framework).][added: Commission.]

As a result of this assessment, management concluded that, as of December 31, [removed: 2021,] [added: 2022,] our internal control over financial reporting was [added: not] effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

[removed: There was] [added: Except for the changes noted above, there have been] no [removed: change] [added: other changes] in our internal control over financial reporting during the fiscal quarter ended December 31, [removed: 2021,] [added: 2022,] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We have audited the internal control over financial reporting of Axon Enterprise, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in the 2013 [removed: _Internal] [added: Internal] Control—Integrated [removed: Framework_] [added: Framework] issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, [added: because of] the [removed: Company maintained, in all] [added: effect of the] material [removed: respects,] [added: weakness described in the following paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained] effective internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, [removed: 2021, and our report dated February 24, 2022 expressed an unqualified opinion on those financial statements.][added: 2022.]

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control over Financial [removed: Reporting (“Management’s Report”).][added: Reporting.]

During the year ended December 31, 2022, we identified a material weakness in our internal control over financial reporting.

A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

Specifically, during the year ended December 31, 2022, we identified a material weakness in our internal controls stemming from control deficiencies with respect to the risks of understatement of software and services revenue and overstatement of deferred revenue.

This material weakness in internal control over financial reporting resulted from a failure to effectively manage the migration of triggering events for certain software and services performance obligations during the quote-to-cash phase of the implementation of our Enterprise Resource Planning (“ERP”) and related systems in 2021.

Additionally, there were limited instances of invoicing errors resulting from ineffective change management of the quote-to-cash systems implementation.

The manual business processes for tracking open software and services performance obligations and for monitoring billing events were not sufficiently robust to prevent the errors.

The related business processes and account reconciliation detective controls were not designed to operate with a sufficient degree of precision to identify these errors on a timely basis.

These deficiencies resulted in immaterial understatements of revenue that accumulated over time and were corrected in the fourth quarter of 2022 as disclosed in Note 1 of the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

Remediation Plan

To remediate the material weakness described above, we are designing and implementing new business processes and automation of integrations between our systems as well as enhancing our reconciliation controls and monitoring procedures to properly ensure transactions are identified and recorded timely and accurately.

We are in the process of documenting, assessing and testing the necessary changes in our internal control over financial reporting as part of our efforts to comply with Section 404 of the Sarbanes-Oxley Act.

The material weaknesses will not be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

We expect that the remediation of this material weakness will be completed prior to the end of fiscal year 2023.

A material weakness is a deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management’s assessment.

Management has identified a material weakness resulting from a failure to effectively manage the migration of triggering events for certain software and services performance obligations and invoicing errors during the quote-to-cash cycle.

The related business processes and account reconciliation detective controls were not designed to operate with a sufficient degree of precision to identify these errors on a timely basis.

The material weakness identified above was considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and this report does not affect our report dated February 28, 2023 which expressed an unqualified opinion on those financial statements.

February 28, 2023

​

February 24, 2022

None.

Item 1.01 Entry into a Material Definitive Agreement

On February 23, 2022, the Company entered into construction management agreement with Okland Construction Company, Inc. for construction of a new manufacturing and office campus on land the Company owns in Scottsdale, Arizona.

The contract specifies a maximum guaranteed construction price of approximately $149.7 million.

Construction is expected to start no later than May 3, 2022 with final completion by July 25, 2024.

The information required to be disclosed by this item is incorporated herein by reference to our definitive proxy statement for the [removed: 2022] [added: 2023] Annual Meeting of Stockholders (the [removed: “2022] [added: “2023] Proxy Statement”), which proxy statement we expect to file with the SEC within 120 days after the end of our fiscal year ended December 31, [removed: 2021.][added: 2022.]

The information required to be disclosed by this item is incorporated herein by reference to our [removed: 2022] [added: 2023] Proxy Statement.

A description of our equity compensation plans approved by our stockholders is included in Note [removed: 14] [added: 16] to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

The following table provides details of our equity compensation plans at December 31, [removed: 2021:][added: 2022:]

| Equity compensation plans approved by security holders | ​ | [removed: 4,940,286] [added: 5,096,956] | | $ | 28.58 | | [removed: 1,021,160] [added: 2,749,539] |

| Equity compensation plans not approved by security holders(2) | ​ | [removed: 111,200] [added: 275,095] | ​ | ​ | ​ | | [removed: 29,600] [added: 112,505] |

| (2) | In September [added: 2022, our Board of Directors adopted the Axon Enterprise, Inc. 2022 Stock Inducement Plan (the “2022 Inducement Plan”) pursuant to which we reserved 250,000 shares of common stock for issuance under the Inducement Plan. In September] 2019, our Board of Directors adopted the Axon Enterprise, Inc. 2019 Stock Inducement Plan (the “2019 Inducement Plan”) pursuant to which we reserved 500,000 shares of common stock for issuance under the Inducement Plan. The [added: 2022 and] 2019 Inducement [removed: Plan was] [added: Plans were] adopted without stockholder approval pursuant to Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules. The Inducement [removed: Plan] [added: Plans] provides for the grant of equity-based awards, including [added: restricted stock units, restricted stock, performance shares and performance units, and its terms are substantially similar to our stockholder-approved 2022 Plan and 2019 Plan, respectively. In accordance with Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be] |

| | [removed: restricted stock units, restricted stock, performance shares and performance units, and its terms are substantially similar to our stockholder-approved 2019 Plan. In accordance with Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules, awards under the Inducement Plan may only be] made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company. |

All other information required to be disclosed by this item is incorporated herein by reference to our [removed: 2022] [added: 2023] Proxy Statement.

| Total | ​ | 5,372,051 | | $ | — | | 2,862,044 |

| Total | ​ | 5,051,486 | | ​ | ​ | | 1,050,760 |

The information required to be disclosed by this item is incorporated herein by reference to our [removed: 2022] [added: 2023] Proxy Statement.

The information required to be disclosed by this item is incorporated herein by reference to our [removed: 2022] [added: 2023] Proxy Statement.

| 3.1 | ​ | [Amended and Restated Certificate of [removed: Incorporated] [added: Incorporation] (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q, filed August [removed: 6, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021010634/axon-20210630xex3d1.htm)] [added: 9, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000106918322000036/axon-20220630xex3d1.htm)] |

| 3.2 | ​ | [Bylaws, as amended and restated (incorporated by reference to Exhibit [removed: 3.1] [added: 3.2] to the [removed: Current] [added: Quarterly] Report on Form [removed: 8-K,] [added: 10-Q,] filed [removed: January 31, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022000641/axon-20220125xex3d1.htm)] [added: August 9, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000106918322000036/axon-20220630xex3d2.htm)] |

| 10.2+ | ​ | [Form of Indemnification Agreement between the Company and its officers (incorporated by reference to Exhibit [removed: 10.15] [added: 10.5] to Registration Statement on Form SB-2, effective May 11, 2001 (Registration No. [removed: 333-55658))](https://www.sec.gov/Archives/edgar/data/1069183/000095015301500410/p64567a3ex10-15.txt)] [added: 333-55658))](https://www.sec.gov/Archives/edgar/data/1069183/000095015301000227/p64567ex10-5.txt)] |

| [removed: 10.9] [added: 10.9+] | ​ | [removed: [Amended and Restated Credit] [added: [Executive Employment] Agreement [removed: dated December 31, 2018] [added: by and] between [removed: the Company] [added: Axon Enterprise, Inc.] and [removed: JP Morgan Chase Bank, N.A.] [added: Luke S. Larson] (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed [removed: January 7, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000010/ex101jpmcreditagreement.htm)] [added: June 4, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex101.htm)] |

| 10.10+ | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and [removed: Jawad A. Ahsan] [added: Joshua M. Isner] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.3] to the Current Report on Form 8-K, filed June 4, [removed: 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex102.htm)] [added: 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex103.htm)] |

| [removed: 10.11+] [added: 10.15+] | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and [removed: Luke S. Larson] [added: James C. Zito] (incorporated by reference to Exhibit 10.1 to the [removed: Current] [added: Quarterly] Report on Form [removed: 8-K,] [added: 10-Q,] filed [removed: June 4, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex101.htm)] [added: August 9, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000106918322000036/axon-20220630xex10d1.htm)] |

| [removed: 10.12+] [added: 10.18+] | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and [removed: Joshua M. Isner] [added: Brittany Bagley] (incorporated by reference to Exhibit [removed: 10.3] [added: 10.1] to the [removed: Current] [added: Quarterly] Report on Form [removed: 8-K,] [added: 10-Q,] filed [removed: June 4, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000093/ex103.htm)] [added: November 9, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000106918322000055/axon-20220930xex10d1.htm)] |

| [removed: 10.13+] [added: 10.11+] | ​ | [Executive Employment Agreement by and between Axon Enterprise, Inc. and Jeffrey C. Kunins, dated September 23, 2019 (incorporated by reference to Exhibit 10.16 to the Annual Report on Form 10-K, filed February 28, 2020)](https://www.sec.gov/Archives/edgar/data/1069183/000106918320000016/ex1016jeffkuninsemploy.htm) |

| [removed: 10.14+] [added: 10.12+] | ​ | [Axon Enterprise, Inc. 2019 Stock Inducement Plan (incorporated by reference to Exhibit 99.1 to the registration statement on Form S-8, filed September 23, 2019)](https://www.sec.gov/Archives/edgar/data/1069183/000106918319000123/a2019stockinducementplan.htm) |

| [removed: 10.15] [added: 10.13+] | ​ | [Auction Statement from the Company to the Arizona State Land Department (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed November 6, 2020)](https://www.sec.gov/Archives/edgar/data/1069183/000106918320000075/aaxn-20200930ex1018fc955.htm) |

| [removed: 10.16] [added: 10.14±] | ​ | [removed: [Amendment to the Amended] [added: [Construction Management Agreement, dated February 23, 2022, by] and [removed: Restated Credit Agreement] between [removed: the Company] [added: Axon Enterprise, Inc.] and [removed: JP Morgan Chase Bank, N.A.] [added: Okland Construction Company, Inc.] (incorporated by reference to Exhibit [removed: 10.1] [added: 10.19] to the [removed: Current] [added: Annual] Report on Form [removed: 8-K,] [added: 10-K,] filed February [removed: 3, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000106918321000003/axon-20210129ex101bd48a9.htm)] [added: 24, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex10d19.htm)] |

| [removed: 10.18] [added: 4.3] | ​ | [removed: [Distribution Agreement,] [added: [Indenture,] dated [removed: August 10, 2021, by and] [added: as of December 9, 2022,] between Axon Enterprise, Inc. and [removed: J.P. Morgan Securities LLC] [added: U.S. Bank Trust Company, National Association, as trustee] (incorporated by reference to Exhibit [removed: 1.1] [added: 4.1] to the Current Report on Form 8-K, filed [removed: August 10, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021011057/axon-20210810xex1d1.htm)] [added: December 9, 2022)](https://www.sec.gov/Archives/edgar/data/0001069183/000106918322000065/axon-20221206xex4d1.htm)] |

| [removed: 10.19*±] [added: 10.21*] | ​ | [removed: [Construction Management] [added: [Credit] Agreement, dated [removed: February 23,] [added: December 15,] 2022, by and between Axon Enterprise, Inc. and [removed: Okland Construction Company, Inc.](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex10d19.htm)] [added: JPMorgan Chase Bank, N.A.](https://www.sec.gov/Archives/edgar/data/1069183/000155837023002413/axon-20221231xex10d24.htm)] |

| 21.1* | ​ | [List of [removed: Subsidiaries](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex21d1.htm)] [added: Subsidiaries](https://www.sec.gov/Archives/edgar/data/1069183/000155837023002413/axon-20221231xex21d1.htm)] |

| 23.1* | ​ | [Consent of Grant Thornton, LLP, independent registered public accounting [removed: firm](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex23d1.htm)] [added: firm](https://www.sec.gov/Archives/edgar/data/1069183/000155837023002413/axon-20221231xex23d1.htm)] |

| 31.1* | ​ | [Principal Executive Officer Certification pursuant to Rule 13a-14(a) or Rule [removed: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex31d1.htm)] [added: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837023002413/axon-20221231xex31d1.htm)] |

| 31.2* | ​ | [Principal Financial Officer Certification pursuant to Rule 13a-14(a) or Rule [removed: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex31d2.htm)] [added: 15d-14(a)](https://www.sec.gov/Archives/edgar/data/1069183/000155837023002413/axon-20221231xex31d2.htm)] |

| 32 | ​ | [Principal Executive Officer and Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/1069183/000155837022002006/axon-20211231xex32.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1069183/000155837023002413/axon-20221231xex32.htm)] |

| 104 | ​ | The cover page from the Company’s Annual Report for the year ended December 31, [removed: 2021,] [added: 2022,] formatted in Inline XBRL |

| 4.4 | ​ | [Form of 0.50% Convertible Senior Note due 2027 (incorporated by reference to Exhibit A in Exhibit 4.1 to the Current Report on Form 8-K, filed December 9, 2022)](https://www.sec.gov/Archives/edgar/data/0001069183/000106918322000065/axon-20221206xex4d1.htm) |

| 10.16+ | ​ | [Axon Enterprise, Inc. 2022 Stock Incentive Plan (incorporated by reference to Annex B of the Company’s Proxy Statement, filed April 8, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000155837022005230/tmb-20220520xdef14a.htm) |

| 10.17+ | ​ | [Axon Enterprise, Inc. 2022 Stock Inducement Plan (incorporated by reference to Exhibit 99.1 to the registration statement on Form S-8, filed September 23, 2022)](https://www.sec.gov/Archives/edgar/data/1069183/000106918322000045/tmb-20220923xex99d1.htm) |

| 10.19 | ​ | [Form of Convertible Note Hedge Confirmation (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed December 9, 2022)](https://www.sec.gov/Archives/edgar/data/0001069183/000106918322000065/axon-20221206xex10d1.htm) |

| 10.20 | ​ | [Form of Warrant Confirmation (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed December 9, 2022)](https://www.sec.gov/Archives/edgar/data/0001069183/000106918322000065/axon-20221206xex10d2.htm) |

| 10.17 | ​ | [Letter Amendment to the Amended and Restated Credit Agreement between the Company and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed November 15, 2021)](https://www.sec.gov/Archives/edgar/data/1069183/000155837021016019/axon-20210930xex10d1.htm) |

| Date: February [removed: 24, 2022] [added: 28, 2023] | ​ | ​ |

| ​ | ​ | _Chief Financial [added: Officer and Chief Business] Officer_ |

| /s/ PATRICK W. SMITH | ​ | (Principal Executive Officer) | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| ​ | ​ | Chief Financial Officer [added: and Chief Business Officer] | ​ | ​ |

| /s/ [removed: JAWAD A. AHSAN] [added: BRITTANY BAGLEY] | ​ | (Principal Financial and Accounting Officer) | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| /s/ ADRIANE M. BROWN | ​ | Director | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| /s/ JULIE A. CULLIVAN | ​ | Director | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| /s/ MICHAEL GARNREITER | ​ | Director | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| /s/ CAITLIN E. KALINOWSKI | ​ | Director | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| /s/ MARK W. KROLL | ​ | Director | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| /s/ MATTHEW R. MCBRADY | ​ | Director | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| /s/ HADI PARTOVI | ​ | Director | ​ | February [removed: 24, 2022] [added: 28, 2023] |

| Date: February 28, 2023 | By: | /s/ BRITTANY BAGLEY |

| Brittany Bagley | ​ | ​ | ​ | ​ |

| Date: February 24, 2022 | By: | /s/ JAWAD A. AHSAN |

| ​ | ​ | ​ | ​ | ​ |

| Jawad A. Ahsan | ​ | ​ | ​ | ​ |

| /s/ RICHARD H. CARMONA | ​ | Director | ​ | February 24, 2022 |

| Richard H. Carmona | ​ | ​ | ​ | ​ |