Axon Enterprise (AXON) 10-K risk factor changes: FY2024 vs FY2023

[removed: Because of the following factors, as well as other variables affecting our operating results, our] [added: Our] past financial performance may not be a reliable indicator of our future performance and historical trends should not be used to anticipate our results or trends in future [removed: periods.][added: periods because of the following factors and other variables affecting our operating results.]

If any of the following trends, risks or uncertainties actually occurs or continues, our [removed: business,] [added: business prospects,] financial [removed: condition or operating] [added: condition,] results [added: of operations or cash flows] could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment.

[removed: _Strategic Risks_][added: Strategic Risks]

[added: -] We [removed: are] substantially [removed: dependent] [added: depend] on acceptance of our products and services by law enforcement agencies throughout the world.

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

Our largest customer [removed: segment] [added: vertical] is U.S. [added: federal,] state and local law enforcement.

Axon has a customer relationship with a substantial number of [added: federal,] state and local law enforcement agencies in the United States.

For example, we believe that in the past our sales were adversely impacted by negative coverage and publicity surrounding our products and services and their [removed: use.][added: use and this could occur in the future, including as a result of factors beyond our control.]

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

[added: -] We substantially depend on sales of our [removed: TASER] CEDs, and if these products do not continue to be widely accepted, our [removed: growth] [added: business] prospects, operating results and financial condition will be diminished.

[removed: In each of] [added: For] the years ended December 31, [removed: 2023, 2022] [added: 2024, 2023] and [removed: 2021,] [added: 2022,] we derived a significant portion of our revenues from sales of [removed: TASER brand devices] [added: CEDs] and related [removed: cartridges,] [added: products and services,] whether [removed: on a standalone basis] [added: sold individually] or as part of a [removed: bundled offering, and expect to depend on sales of these products for a significant portion of our revenue for the foreseeable future.][added: subscription plan offering.]

The acceptance of these devices is critical to our [removed: growth] [added: business] prospects, operating results and financial condition.

If we [removed: are unable to] [added: cannot] continue to meet customer demands or [removed: to] achieve more widespread market acceptance of these products, our [removed: growth] [added: business] prospects, operating [removed: results] [added: results,] and financial condition will be materially adversely affected.

Demand for [removed: these offerings] [added: CED products] is affected by [removed: a number of factors (some] [added: several factors, many] of which are beyond our [removed: control),] [added: control,] including continued market acceptance of [removed: these] [added: our] products by our customers, technological [removed: change] [added: change,] and growth or contraction of the economy in general.

[removed: Our TASER] [added: Additionally, our] CEDs and other offerings or products could fail to maintain or attain sufficient customer acceptance for many reasons, including:

[removed: | | ● |] [added: -] our failure to predict market demand [removed: accurately in terms] [added: accurately, whether as a result] of [added: a failure to anticipate demand for] product [added: features or] functionality [removed: and] [added: or] to supply offerings that meet this demand; [removed: |]

[removed: | | ● |] [added: -] real or perceived defects, errors or failures; [removed: |]

[removed: | | ● |] [added: -] negative publicity about [removed: their] [added: product] performance or effectiveness; [removed: |]

[removed: | | ● |] [added: -] delays in releasing to the market our improved offerings or [added: enhancements, or defects, errors or failures while releasing such offerings or] enhancements; [removed: |]

[removed: | | ● |] [added: -] introduction or anticipated introduction of competing products; and [removed: |]

[removed: | | ● |] [added: -] budget constraints or other limitations for our customers. [removed: |]

A decrease in the selling prices of or demand for these products, or their failure to maintain broad market acceptance, would significantly harm our competitive position, [removed: growth] [added: business] prospects, operating results and financial condition.

[added: -] 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.

Our future success will [added: likely] depend on our ability to develop new products or [removed: new] product features that achieve market acceptance in a timely and cost-effective [removed: manner.][added: manner and in a way that is responsive to customer demand.]

The development of new products and [removed: new] product features is complex, time-consuming and expensive, and we may experience delays [added: or incur significant additional costs] in completing the development and introduction of new products.

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

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

[removed: Customers’] [added: Additionally, customers’] requirements for these products are complex and varied.

[added: If we cannot develop scalable solutions] that can [added: be] consistently [added: configured for customers with minimal effort or grow and maintain 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 [removed: our cloud-based productivity and real-time operations] SaaS solutions could be negatively impacted, and our business prospects, operating results and financial condition could be negatively impacted.

[added: -] We face risks associated with rapid technological change and new competing products.

The technology associated with law enforcement devices and software [removed: is receiving] [added: receives] significant attention and is rapidly evolving.

The introduction of products embodying new technologies [removed: (such as the use of AI] and [removed: machine learning) and] the emergence of new industry standards can render existing products obsolete and unmarketable.

Additionally, [added: we expect] our products [removed: are expected] to meet and keep pace with evolving security standards and requirements of our industry and customers, including those of the U.S. federal government and international governments.

While we have some patent protection in certain key areas of our Axon [removed: device, CED] [added: devices, CEDs] 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.

Additionally, our competitors may develop competing technologies or products [removed: that provide] [added: with] superior features or [removed: are less expensive than our products, or our competitors may] [added: lower costs,] respond [removed: more quickly] [added: quicker] to [removed: new or] emerging technologies, [removed: undertake] [added: conduct] more extensive marketing campaigns, have greater financial, marketing, manufacturing and other [removed: resources than we do, or] [added: resources, and] may be more successful in attracting potential customers, employees and strategic partners.

If we [removed: are not able to] [added: cannot] compete effectively, our business and financial results could be adversely affected.

[added: -] Our future success [removed: is dependent] [added: depends] 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.

Our distribution strategy is to pursue sales through multiple [removed: channels, which are principally] [added: channels primarily through] direct sales and independent distributors.

We [removed: are focusing] [added: focus] on direct sales to larger agencies [removed: through our regional sales managers] and our inability to grow sales to these agencies in this manner would materially adversely affect our business prospects, operating [removed: results] [added: results,] and financial condition.

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

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 risks we face, which are set forth more fully below.

- Acquisitions of, or investments in, other products, technologies or businesses could disrupt our business, dilute shareholder value, and adversely affect our operating results.

- We may not successfully manage our growth or plan for future growth.

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

- If our security measures or those of our third-party providers, including cloud storage providers, are breached, resulting in unauthorized access to our and our customers’ data, it could undermine the confidence in our network, data centers and services, leading to reduced customer use of our products and services and significant legal and financial exposure and liabilities.

- Failure to maintain effective internal control over financial reporting may adversely affect our ability to report our financial condition and operating results in a timely and accurate manner, which may cause investor confidence to diminish and the value of our common stock to decline.

- Our revision of previously issued consolidated financial statements may adversely affect investor confidence and could result in regulatory actions and stockholder litigation.

- Other litigation, government inquiries and regulatory actions may result in significant costs and judgments and divert management attention from our business.

- The use of open-source software in our products, services and technologies may expose us to additional risks and harm our intellectual property rights.

- Fulfilling our debt obligations requires significant cash resources, which may exceed our available cash flow.

- The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.

- Conversion of the Notes may dilute the shareholder ownership and could depress the price of our common stock.

- Changes in the accounting treatment for the Notes may have a material effect on our reported financial results.

- The 2027 Note Hedge and Warrant transactions may impact the value of the Notes and our common stock.

*Strategic Risks*

We substantially depend on acceptance of our products and services by law enforcement agencies throughout the world.

If law enforcement agencies do not continue to purchase and use our products and services, our business prospects, operating results and financial condition will be materially adversely affected.

We substantially depend on sales of our CEDs, and if these products do not continue to be widely accepted, our business prospects, operating results, and financial condition could be diminished.

We anticipate that these products will continue to account for a significant portion of our revenue for the foreseeable future.

- real or perceived failure to offer complementary products that enhance the functionality of our offerings;

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.

If there is a substantial increase of new customers in a small window, we may have difficulty deploying these solutions in a way that meets market demand.

Increases in customer demand may require us to change our

IT infrastructure, expand our IT infrastructure or replace our IT infrastructure entirely.

Scaling and adapting our IT infrastructure is likely to be complex and require additional technical expertise.

If we are required to make any changes to our IT infrastructure, we may incur substantial costs and experience delays or interruptions in our solutions.

These delays or interruptions may cause customers to become dissatisfied with our solutions and move to competing providers.

Our failure to accommodate increased traffic, increased costs, inefficiencies or failures to adapt to new technologies or customer requirements and the associated adjustments to our IT infrastructure could harm our business prospects, operating results and financial condition.

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

In particular, AI and machine learning technologies are rapidly developing and as these technologies are incorporated into our products and the operations of our customers, the pace of change has in the past and may in the future continue to accelerate.

Our future success depends 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.

Failure to overcome this resistance and successfully establish direct relationships with our customers could negatively impact sales, or our competitors may be better positioned by continuing to sell through distributors, which could adversely affect our business prospects, operating results and financial condition.

Negative publicity could adversely impact sales, which could cause our revenues or operating results to decline.

Our reputation and our brands have in the past been, and could in the future be, damaged by negative publicity, whether or not merited or as a result of actions that are within our control.

Negative publicity could relate to our company, our brands, our products, our supply chain, our packaging, our employees or any other aspect of our business.

We could experience negative publicity (which may be raised by consumer advocacy groups, third-party interest groups, investors, employees or other stakeholders) for a variety of reasons, including as a result of product safety issues, threatened or pending legal or regulatory proceedings, product claims, advertising and promotional practices, sustainability or policy issues, materials sourcing or cybersecurity incidents.

Negative publicity that damages one of our brands could be compounded by having an adverse effect on our other brands or our company as a whole.

Alternatively, our employees may knowingly or inadvertently use digital or social media platforms in ways that may not be aligned with out digital or social media strategy and could damage our reputation or our brands.

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

If we cannot develop scalable solutions that can be consistently configured for customers with minimal effort or grow a professional services team

If we do not overcome this resistance and effectively build a direct relationship with our customers, sales may be adversely affected.

media environment.

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

| | ● | inability to correct or achieve regulatory approvals or certifications; |

| | ● | 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 acquired products 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 or how we are perceived by investors; |

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

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

| | ● | 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. |

Although we have and are implementing additional long-term agreements with strategic suppliers to mitigate the risk of supply continuity, there remains risk across our supply chain while we extend our supplier contract program, and there is no guarantee that supply will not be interrupted.

Due to the unique requirements of TASER 10, including the regulation of certain TASER 10 components for import into the United States and export from foreign sources, we purchase our raw materials from a limited number of suppliers.

We may be slower to establish alternative sources of supply for TASER 10 components as we continue to refine the design of the product.

Domestic or international 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 our revenues, profitability and financial condition.

We may be unable to transition away from China to other jurisdictions or obtain secondary sources for raw materials, which could result in a material adverse effect on component availability and could result in a material adverse effect on our revenues, profitability and financial condition.

To achieve market acceptance for our products, we must effectively anticipate customer requirements, and we must offer products that meet changing customer demands in a timely and cost-effective manner.

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

Some of our customers use funds seized through civil forfeiture proceedings to fund the purchase of our products.

From time to time, civil forfeiture proceedings have in the past received and may in the future receive media scrutiny and public criticism.

Legislative changes could impact our customers’ ability to seize funds or use seized funds to fund purchases.

Changes in civil forfeiture statutes or regulations could limit the amount of funds available to our customers, which could adversely affect the sale of our products.

Remote-work arrangements may also make our systems and employees more susceptible to attack.

A real or perceived security breach could also result in a loss of confidence in the security of our products and services, disrupt our business, damage our reputation, subject us to third-party lawsuits, regulatory fines or investigations or otherwise subject us to legal liability, negatively impact our future sales and significantly harm our growth prospects, operating results and financial condition.

A catastrophic event that results in the destruction or disruption of any of our critical operations, or of the

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.

In addition, our suite of TASER devices are regulated by the U.S. Bureau of Industry and Security and require licenses for export abroad.

Changes to foreign political, economic, regulatory, tax, social and labor conditions may adversely harm our business.

Compliance with complex foreign and U.S. laws and regulations makes it harder to do business in certain

jurisdictions, potentially decreases sales, and increases our cost of doing business.

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 applicable terms of the employment agreements.

TASER 10 is primarily regulated by the ATF, which licenses the manufacture, sale and import of firearms in the United States.

For example, we identified a material weakness in our internal controls over revenue recognition and the reporting of deferred revenue for the year ended December 31, 2022 which has been remediated as further discussed in “Item 9A.

This is in contrast to a traditional CED sale in which the entire amount being charged for the hardware is invoiced upon shipment.

This impacts liquidity in a commensurate fashion, with the cash for the subscription or installment purchase received in multiple installments rather than up front.

| | ● | our ability to reduce production costs; |

Most of our end-user customers are government agencies.

These agencies often do not set their own budgets and therefore, have limited control over the amount of money they can spend.

In addition, these agencies experience political pressure that may dictate the manner in which they spend money.

[added: Our MD&A should be read in conjunction with the other sections of this Annual Report on Form 10-K, including “Part I, Item 1A - Risk Factors” and “Part II, Item 8 -] Financial Statements and Supplementary Data.” The various sections of our MD&A contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing.

Our MD&A discusses our results of operations for the year ended December 31, [removed: 2023] [added: 2024] as compared to the year ended December 31, [removed: 2022.][added: 2023.]

For a discussion and analysis of the year ended December 31, [removed: 2022] [added: 2023] as compared to the year ended December 31, [removed: 2021, please] [added: 2022,] 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: 2022,] [added: 2023,] filed with the SEC on February [removed: 28, 2023.][added: 27, 2024.]

[removed: Overview][added: Overview]

Axon’s [removed: product] suite includes cloud-hosted digital evidence [removed: management,] [added: management solutions,] productivity and real-time operations software, [removed: body-worn] [added: body] cameras, in-car cameras, TASER energy devices, robotic security and training solutions.

We derive revenue from two primary sources: [removed: (i)] [added: (1)] the sale of physical products, including [added: CEDs,] Axon cameras, Axon Signal-enabled devices, [removed: CEDs,] corresponding hardware extended warranties, and related accessories such as Axon docks, cartridges and batteries, among others, and [removed: (ii)] [added: (2)] subscriptions to our Axon Evidence digital evidence management SaaS offering (including data storage fees and other ancillary services), which includes varying levels of support.

Our revenues for the year ended December 31, [removed: 2023] [added: 2024] were [removed: $1.6] [added: $2.1] billion, an increase of [removed: $373.5] [added: $521.8] million, or [removed: 31.4%,] [added: 33.4%,] from the [added: comparable period in the] prior year.

We had income from operations of [removed: $154.8 million in 2023] [added: $58.5 million,] compared to [removed: income from operations of $93.3] [added: $156.9] million [added: for the same period] in the prior year.

[removed: For the year ended December 31, 2023, we recorded net] [added: Net] income of [removed: $174.2 million, which] [added: $175.8 million for the comparable period in the prior year] reflected net unrealized losses of $80.5 million related to impairment and observable price changes for our existing investments and related warrants, interest income, net of $42.1 million, and [removed: an] [added: a net] unrealized gain of $38.7 million on marketable [removed: securities related to our investment in Cellebrite DI Ltd.][added: securities.]

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

| [removed: ​] | [removed: ​] | [added: |] Year Ended December 31, | | | | | | | | | | | [added: | | | | | | | | | |]

| Cost of service sales | [removed: ​] | | [removed: 157,291] [added: 223,010] | | [removed: 10.1] | [removed: ​] | [removed: ​] | | [removed: 98,078] [added: 10.7] | | [removed: 8.3] | [removed: ​] | [added: | | 157,538 | | | | | | 10.1 | | |]

| Interest income, net | [removed: ​] | [removed: ​] | [removed: 42,112] [added: 36,595] | [removed: ​] | [removed: 2.7] | [removed: ​] | [removed: ​] | [removed: ​] | [removed: 4,294] [added: 1.8] | [removed: ​] | [removed: 0.4] | [removed: ​] | [added: | | 42,112 | | | | | | 2.7 | | |]

| Other income (loss), net | [removed: ​] | | [removed: (41,901)] [added: 286,369] | | [removed: (2.7)] | [removed: ​] | [removed: ​] | | [removed: 98,971] [added: 13.8] | | [removed: 8.3] | [removed: ​] | [added: | | (41,901) | | | | | | (2.7) | | |]

| Provision for (benefit from) income taxes | [removed: ​] | | [removed: (19,227)] [added: 4,470] | | [removed: (1.2)] | [removed: ​] | [removed: ​] | | [removed: 49,379] [added: 0.2] | | [removed: 4.1] | [removed: ​] | [added: | | (18,722) | | | | | | (1.2) | | |]

| Other [removed: Countries] [added: countries] | [removed: ​] | | [removed: 225,183] [added: 307,332] | | [removed: 14] | [removed: ​] | [removed: ​] | | [removed: 201,960] [added: 15] | | [removed: 17] | [removed: ​] | [added: | | 225,183 | | | | | | 14 | | |]

[removed: For] [added: | | | | For] the [removed: Years Ended] [added: year ended] December 31, [removed: 2023 and 2022][added: 2024 | | | | | | | | | | | | | | | | | | For the year ended December 31, 2023 | | | | | | | | | | | | | | |]

[removed: Net Sales][added: Net Sales]

| [removed: ​] | [removed: ​] | [added: |] Year Ended December 31, | | | | | | | | | | [removed: Dollar] | | | [added: | | | | | | | | | | | Dollar Change | | | | | |] Percent [added: Change] | | [added: |]

| [removed: ​] | [removed: ​] | [removed: 2023] | [added: 2024] | | | [removed: ​] | [removed: 2022] | | [added: 2023] | | [removed: ​] | [removed: Change] | | [removed: ​] | Change | | [added: |]

| TASER segment: | | [removed: ​] | | | | | [removed: ​] | | | | | [removed: ​] | | | | [removed: ​] | [added: | | | | | | | | | | | | | | | | | | |]

| Software and Sensors segment: | [removed: ​] | | [removed: ​] | | [removed: ​] | [removed: ​] | | [removed: ​] | | [removed: ​] | [removed: ​] | | | | | [removed: ​] | [added: | | | | | | | | | | | | | | | | | | |]

| Axon Body Cameras and Accessories | [removed: ​] | | [added: 246,855 | | | | | | 11.9 | | | | | |] 183,023 | | [added: | | | |] 11.7 | [removed: ​] | | [removed: 157,281] | | [removed: 13.2] | [removed: ​] [added: 63,832] | | [removed: 25,742] | | [removed: 16.4] | [removed: ​] | [added: 34.9 | | |]

[removed: (1) TASER] [added: (1)TASER] segment “Other” includes smaller categories, such as VR hardware, [removed: CED] [added: weapons] training revenue such as revenue associated with our Master Instructor School, and TASER consumer device sales.

[removed: (2) Software] [added: (2)Software] and Sensors segment “Other” includes revenue from items including Signal Sidearm, Interview [removed: Room and] [added: Room,] Axon [removed: Air.][added: Air, partners' contra-revenue and other sensors and equipment.]

Net sales for the TASER segment for the year ended December 31, [removed: 2023] [added: 2024] increased [removed: $81.0] [added: $205.2] million, or [removed: 15.2%,] [added: 33.4%, as compared to the prior year,] primarily due to an increase of [removed: $51.2] [added: $119.1] million in TASER devices [removed: (professional)] and an [removed: $11.6 million] increase [added: of $53.5 million] in cartridge revenue.

[removed: Net sales for] [added: The increase in revenue from] Axon Evidence and cloud services [removed: increased $16.0] [added: of $19.2] million [removed: due to] [added: was driven by] an increase in the number of cloud-connected TASER devices in the [removed: field, as well as an increase in] [added: field and software revenue tied to our] VR [removed: revenue.][added: solution.]

Net sales for the Software and Sensors segment for the year ended December 31, [removed: 2023] [added: 2024] increased [removed: $292.4] [added: $316.7] million, or [removed: 44.4%,] [added: 33.4%,] as [added: compared to the prior year, as] we [removed: continue] [added: continued] to add users and associated devices to our network.

An increase in cameras and docks in the field drove the [removed: $12.8] [added: $11.0] million increase in extended warranties, as most of those devices are sold with extended warranties.

[removed: Gross Margin][added: Gross Margin]

[removed: Gross] [added: Adjusted gross] margin [removed: (dollars in] [added: reconciles to gross margin as follows (in] thousands):

| [removed: ​] | [removed: ​] | [added: |] Year Ended December 31, | | | | | | | | | | [removed: ​] | [added: | | | | | | | | | |]

[removed: Gross] [added: Service gross] margin increased [removed: $226.7 million] to [removed: $955.4 million] [added: 73.0%] for the year ended December 31, [removed: 2023] [added: 2024] compared to [removed: $728.6 million] [added: 72.6%] for the [removed: year ended December 31, 2022.][added: same period in 2023.]

As a percentage of [removed: total segment] net sales, gross margin for the TASER segment decreased to [removed: 60.5% for the year ended December 31, 2023,] [added: 58.6%] from [removed: 63.3%] [added: 60.6%] for the [removed: year] [added: years] ended December 31, [removed: 2022.][added: 2024 and 2023, respectively.]

[removed: Within the Software and Sensors segment, gross margin as] [added: As] a percentage of [removed: total segment] net [removed: sales increased to 61.5%] [added: sales, gross margin] for the [removed: year ended December 31, 2023] [added: Software and Sensors segment decreased to 60.2%] from [removed: 59.5%] [added: 61.6%] for the [removed: year] [added: years] ended December 31, [removed: 2022.][added: 2024 and 2023, respectively.]

Within the Software and Sensors segment, hardware gross margin was [removed: 45.6%] [added: 37.7%] for the year ended December 31, [removed: 2023,] [added: 2024,] compared to [removed: 42.1%] [added: 45.8%] for the same period in [removed: 2022, while service margin decreased to 72.6% from 73.3%, respectively, during each of those same time periods.][added: 2023.]

[removed: We anticipate] [added: For the year ended December 31, 2024, we have seen] an increase in stock-based compensation expense [removed: reflected] within [added: our] cost of goods sold as a result of RSUs granted in January 2024 that generally vest in five annual installments from March 2024 through March 2028.

As [removed: further discussed] [added: previously disclosed] in Note 15 to our consolidated financial statements included within [removed: this] [added: our] Annual Report on Form [removed: 10-K,] [added: 10-K for the year ended December 31, 2023,] Patrick W.

Smith, our Chief Executive Officer, agreed to compensation in a lesser amount than the Compensation Committee of our Board of Directors was otherwise willing to provide so that [removed: the Company] [added: we] could instead provide enhanced compensation opportunities to [removed: other employees] [added: certain] of [removed: the Company.][added: our other employees.]

[removed: Sales,] [added: Selling,] General and Administrative [removed: Expenses][added: Expenses]

Axon is building the public safety operating system of the future by integrating a suite of hardware devices and cloud software solutions that not only revolutionize modern policing but also cater to federal agencies, corrections, justice and enterprise-level security and safety needs.

Axon’s growing global customer base includes first responders across international, federal, state, and local law enforcement, fire, corrections, and emergency medical services, as well as the justice sector, commercial enterprises, and consumers.

Gross margin dollars increased $285.9 million but decreased as a percentage of revenue to 59.6% from 61.2% compared to the same period in the prior year.

The decrease was primarily driven by higher stock-based compensation expense and amortization of acquired intangibles.

Excluding the impacts of stock-based compensation expense and intangibles amortization in costs of goods sold, adjusted gross margin increased to 63.2% for the year ended December 31, 2024, compared to 61.8% for the same period in the prior year, primarily due to an increased mix of high-margin Axon Cloud & Services revenue and investments in TASER automation and cost-reduction initiatives.

Operating expenses increased $384.2 million, reflecting an increase in salaries, benefits, and stock-based compensation expenses, as well as an increase in professional and consulting expenses related to transaction costs.

For the year ended December 31, 2024, we recorded net income of $377.0 million which included net realized and unrealized gains on fair value adjustments of strategic investments of $162.9 million, a net unrealized gain on marketable securities of $120.3 million, and interest income, net of $36.6 million.

Certain prior period amounts previously reported on our consolidated financial statements have been revised to correct for immaterial errors, as described in Note 1, Note 23 and Note 24 included in Part II, Item 8 of this Annual Report on Form 10-K.

Additionally, in Q1 2025 we approved a plan to realign our business to better reflect our continued growth and expansion of product, software and service offerings.

Previously reported within two reportable segments, TASER and Software and Sensors, we will prospectively reorganize our business in a manner that provides increased transparency and distinction between our hardware and software and services components.

As a result of the reorganization, effective with the first quarter of fiscal year 2025, our financial results will be reported in two reportable segments, Connected Devices and Software & Services, which our CODM will use to regularly review information, allocate resources and assess performance.

Connected Devices will include hardware products, such as CEDs, body cameras, and drones.

Software & Services will include products that integrate with our suite of connected devices, such as Axon Evidence, RMS and other cloud services.

We are currently assessing the impact of this change on our financial reporting and related segment disclosures.

We intend to recast prior period segment information to conform to the new reporting structure, as necessary, to ensure consistency and comparability across reporting periods.

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| | | | 2024 | | | | | | | | | | | | 2023 | | | | | | | | |

| Net sales from products | | | $ | 1,221,292 | | | | | 58.6 | | % | | | | $ | 964,002 | | | | | 61.8 | | % |

| Net sales from services | | | 861,234 | | | | | | 41.4 | | | | | | 596,697 | | | | | | 38.2 | | |

| Net sales | | | 2,082,526 | | | | | | 100.0 | | | | | | 1,560,699 | | | | | | 100.0 | | |

| Cost of product sales | | | 618,136 | | | | | | 29.7 | | | | | | 447,708 | | | | | | 28.7 | | |

| Cost of sales | | | 841,146 | | | | | | 40.4 | | | | | | 605,246 | | | | | | 38.8 | | |

| Gross margin | | | 1,241,380 | | | | | | 59.6 | | | | | | 955,453 | | | | | | 61.2 | | |

| Selling, general and administrative | | | 741,247 | | | | | | 35.6 | | | | | | 494,884 | | | | | | 31.7 | | |

| Research and development | | | 441,593 | | | | | | 21.2 | | | | | | 303,719 | | | | | | 19.5 | | |

| Total operating expenses | | | 1,182,840 | | | | | | 56.8 | | | | | | 798,603 | | | | | | 51.2 | | |

| Income from operations | | | 58,540 | | | | | | 2.8 | | | | | | 156,850 | | | | | | 10.0 | | |

| Income before provision for income taxes | | | 381,504 | | | | | | 18.3 | | | | | | 157,061 | | | | | | 10.1 | | |

| Net income | | | $ | 377,034 | | | | | 18.1 | | % | | | | $ | 175,783 | | | | | 11.3 | | % |

The following table presents our revenues disaggregated by geography (dollars in thousands):

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| | | | 2024 | | | | | | | | | | | | 2023 | | | | | | | | |

| United States | | | $ | 1,775,194 | | | | | 85 | | % | | | | $ | 1,335,516 | | | | | 86 | | % |

| Total | | | $ | 2,082,526 | | | | | 100 | | % | | | | $ | 1,560,699 | | | | | 100 | | % |

International revenue increased as a percentage of revenue compared to the prior year, primarily driven by increased sales in our Americas region (i.e., Central America, South America, and Canada).

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| | | | 2024 | | | | | | | | | | | | 2023 | | | | | | | | | | | | | | | | | | | | |

Our MD&A should be read in conjunction with the other sections of this Annual Report on Form 10-K, including “Part I, Item 1A.

Risk Factors” and “Part II, Item 8.

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

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| | 2. | 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. |

To a lesser extent, we also recognize revenue from training, professional services and other software and SaaS services.

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

We also bundle our hardware products and services together and sell them to our customers in single transactions, where the customer can make payments over a multi-year period.

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 $226.7 million in 2023 but remained relatively flat as a percentage of revenue compared to 2022.

Operating expenses for the year ended December 31, 2023 increased $165.2 million, reflecting an increase of $97.2 million in salaries, benefits and bonus expense and an increase in stock compensation of $23.2 million primarily related to an increase in headcount.

(“CLBT”).

This represented an increase of $27.1 million over net income of $147.1 million for the year ended December 31, 2022, which included an unrealized gain of $131.9 million related to observable price changes for our existing investments and related warrants and an unrealized loss of $32.9 million related to CLBT for the prior year.

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| ​ | ​ | 2023 | | | | | ​ | 2022 | | | | |

| Net sales from products | | $ | 967,711 | | 61.9 | % | ​ | $ | 801,388 | ​ | 67.3 | % |

| Net sales from services | ​ | | 595,680 | | 38.1 | ​ | ​ | | 388,547 | | 32.7 | ​ |

| Net sales | ​ | | 1,563,391 | | 100.0 | ​ | ​ | | 1,189,935 | | 100.0 | ​ |

| Cost of product sales | ​ | | 450,718 | | 28.8 | ​ | ​ | | 363,219 | | 30.5 | ​ |

| Cost of sales | ​ | | 608,009 | | 38.9 | ​ | ​ | | 461,297 | | 38.8 | ​ |

| Gross margin | ​ | | 955,382 | | 61.1 | ​ | ​ | | 728,638 | | 61.2 | ​ |

| Operating expenses: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | | | ​ | ​ |

| Sales, general and administrative | ​ | | 496,874 | | 31.8 | ​ | ​ | | 401,575 | | 33.7 | ​ |

| Research and development | ​ | | 303,719 | | 19.4 | ​ | ​ | | 233,810 | | 19.7 | ​ |

| Total operating expenses | ​ | | 800,593 | | 51.2 | ​ | ​ | | 635,385 | | 53.4 | ​ |

| Income from operations | ​ | | 154,789 | | 9.9 | ​ | ​ | | 93,253 | | 7.8 | ​ |

| Income before provision for income taxes | ​ | | 155,000 | | 9.9 | ​ | ​ | | 196,518 | | 16.5 | ​ |

| Net income | | $ | 174,227 | | 11.1 | % | ​ | $ | 147,139 | | 12.4 | % |

Net sales to the United States and other countries are summarized as follows (dollars in thousands):

| ​ | ​ | 2023 | | | | ​ | ​ | 2022 | | | | |

| United States | | $ | 1,338,208 | | 86 | % | ​ | $ | 987,975 | | 83 | % |

| Total | ​ | $ | 1,563,391 | | 100 | % | ​ | $ | 1,189,935 | | 100 | % |

International revenue increased in 2023, driven by strength in our Americas region, but decreased as a percentage of total revenue compared to 2022.

Our operations comprise two reportable segments.

In both segments, we report sales of products and services.

| | ● | The TASER segment includes the manufacture and sale of CEDs, batteries, accessories and extended warranties, digital subscription training content, VR training content, TASER Evidence.com license revenue, and other professional services tied to TASER and VR deployments. |

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

We typically invest in a limited number of financial instruments, consisting principally of investments in money market accounts, certificates of deposit, [added: and] corporate and municipal bonds with a typical long-term debt rating of “A” or better by any nationally recognized statistical rating organization, denominated in U.S. dollars.

All of our cash equivalents and investments are treated as [removed: “available-for-sale.” We report available-for-sale investments at fair value as of each balance sheet date and record any unrealized gains or losses as a component of stockholders’ equity.][added: “available-for-sale”.]

Based on investment positions as of December 31, [removed: 2023,] [added: 2024,] a hypothetical 100 basis point increase in interest rates across all maturities would result in a [removed: $1.8] [added: $0.7] million decline in the fair market value of the portfolio.

Additionally, we have access to a $200.0 million line of credit borrowing facility which bears interest at SOFR [added: plus] 1.25 to 1.75% per year determined in accordance with a pricing grid based on our 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: $7.5] [added: $7.8] million at December 31, [removed: 2023.][added: 2024.]

At December 31, [removed: 2023,] [added: 2024,] there was no amount outstanding under the line of credit, and the available borrowing under the line of credit was [removed: $192.5] [added: $192.2] million.

We have not borrowed any funds under the line of credit since its inception; [removed: however;] [added: however,] should we need to do so in the future, such borrowings could be subject to adverse or favorable changes in the underlying interest rate.

[removed: Exchange] [added: Exchange] Rate [removed: Risk][added: Risk]

However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, [removed: including] [added: including, but not limited to,] the prohibitive economic cost of hedging particular exposures.

To quantify our interest rate risk exposure, we perform a sensitivity analysis based on hypothetical changes in interest rates.

For additional details, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.

There have been no other material changes in our primary risk exposures or management of risks since the prior year.

There have been no other material changes in our primary risk exposures or management of risks since the prior year.

The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in interest and other income, net within the consolidated statements of operations.

When the fair value is below the amortized cost of a marketable security, an estimate of expected credit losses is made.

The credit-related impairment amount is recognized in the consolidated statements of operations.

Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheets and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account.

If we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations.

[removed: Overview][added: Overview]

Axon’s suite includes cloud-hosted digital evidence [removed: management,] [added: management solutions,] productivity and real-time operations software, [removed: body-worn] [added: body] cameras, in-car cameras, TASER energy devices, [added: drone and] robotic [removed: security] [added: security,] and training solutions.

Our hardware and software solutions advance our [removed: long-term strategic vision of] [added: mission to] (i) [removed: obsoleting] [added: make] the [removed: bullet,] [added: bullet obsolete,] (ii) [removed: reducing] [added: reduce] social conflict, [added: and] (iii) [removed: enabling] [added: enable] a fair and effective justice [removed: system, and (iv) building for racial equity, diversity, and inclusion.][added: system.]

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

[removed: | | 2. | Software] [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. [removed: Our software offerings also support productivity and real-time operations. |]

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

For [removed: future contracted revenue by reportable segment,] [added: additional information about our warranties,] refer to [added: Note 1 in] Part II, Item [removed: 7] [added: 8] of this Annual Report on Form [removed: 10‑K.][added: 10-K.]

Our headquarters in Scottsdale, Arizona and our [removed: software hub] [added: hubs] in Seattle, [removed: Washington] [added: Washington; San Francisco, California; Boston, Massachusetts; Atlanta, Georgia; and Sterling, Virginia] house the majority of our in-person employees located in the United States, including members of our executive management team, and sales, marketing, certain engineering, manufacturing, finance and other administrative support functions.

We also have subsidiaries [removed: and / or] [added: and/or] offices located in Australia, Belgium, Canada, Finland, France, Germany, [removed: Hong Kong,] [added: Greece,] India, Italy, the Netherlands, Spain, the United Kingdom and Vietnam.

[removed: Key] [added: Key] Product Category Revenue Drivers: What We [removed: Offer][added: Offer]

Axon products are generally cloud-connected, designed to drive better outcomes and customer experiences, and sold via mutually reinforcing integrated [removed: bundles.][added: subscription plans.]

[removed: | | ● |] [added: -] Sensors: Axon devices address many needs, including transparency, real-time situational awareness, and accurate capture and integration of evidence with software workflows. [removed: Product categories within sensors include Axon Body cameras, Axon Fleet in-car systems, and other devices that work with our software. Our software solutions also support an open ecosystem of connected devices produced by other vendors. |]

[removed: Sales] [added: Sales] and Distribution: Who We Sell To and Where We [removed: Deliver][added: Deliver]

Additionally, the types of customers who find value in our product offerings are expanding beyond law enforcement to include [added: customers such as] attorneys, corrections, fire and emergency medical services [removed: personnel] [added: personnel, commercial enterprise security, frontline enterprise workers,] and the U.S. military.

No customer represented more than 10% of total net sales for the years ended December 31, [removed: 2023, 2022] [added: 2024, 2023] or [removed: 2021.][added: 2022.]

[removed: In recent years,] [added: As] we [added: diversify into new markets, we] have been investing in sales personnel [removed: to capture these new markets,] and [removed: we continue to focus on] strategic headcount additions to support [removed: key new markets and new products.][added: growth in these markets.]

1 [removed: _Calculated] [added: *Calculated] as monthly recurring license, integration, warranty, and storage revenue for the year ended December 31, [removed: 2023.][added: 2024.]

Annual recurring revenue is a [added: forward-looking] performance indicator that management believes provides more visibility into the growth of our revenue generated by our highest margin, recurring services.

Annual recurring revenue is not intended to be a replacement or forecast of revenue or deferred [removed: revenue._][added: revenue.*]

[removed: Resources][added: Resources]

[removed: _Manufacturing] [added: *Manufacturing] and Supply [removed: Chain_][added: Chain*]

We perform light manufacturing, final assembly and final test operations at our facilities in Scottsdale, [removed: Arizona,] [added: Arizona] and own substantially all of the equipment required to develop, prototype, manufacture and assemble our finished products.

Supplier decommitments remain a top [removed: area of risk.]

We proactively manage our supply chain down to third tier suppliers to [added: mitigate and] overcome material [removed: shortages as they arise.][added: shortages.]

We continue to adjust strategic inventory levels in both raw [added: materials] and finished goods based on areas of risk to mitigate potential supply disruptions.

In light of our broad domestic and international supplier base, we are continuously monitoring our supply chain to manage through potential impacts, identifying alternate shipping and logistic sources, and working with foreign regulators to ensure that our suppliers can provide [added: high quality] parts.

In addition, we also have programs to hold additional raw materials (such as [removed: resins] [added: resins, battery components] and critical semiconductors) to mitigate supply [added: interruptions] and better manage costs.

For additional discussion of sources and availability of raw materials, refer to Note 1 [removed: to the consolidated financial statements included] in Part II, Item 8 of this Annual Report on Form 10-K.

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

[removed: _Intellectual Property_][added: *Intellectual Property*]

We protect our intellectual property with U.S. and [removed: international patents] [added: foreign patents, U.S.] and [removed: trademarks.][added: foreign trademark registrations, and U.S. copyright registrations.]

As of December 31, [removed: 2023,] [added: 2024,] we hold over [removed: 300] [added: 330] U.S. patents, over [removed: 125] [added: 150] U.S. registered trademarks, over [removed: 240] [added: 270] international patents and over [removed: 450] [added: 460] international registered trademarks, as well as numerous [added: pending] patent and trademark [removed: applications pending.][added: applications.]

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

[removed: Confidentiality] [added: We also execute non-disclosure] agreements [removed: are used] with employees, consultants and key suppliers to help ensure the confidentiality of our trade secrets.

[removed: Competition][added: Competition]

[removed: _Sensors] [added: *Sensors] — Connected Cameras and Digital Evidence Management [removed: Software:_] [added: Software:*] The [removed: body-worn] [added: body] camera and in-car video/automatic license plate readers industry is highly competitive.

Our competition includes [added: 10-8 Video, 365Labs,] Axis Communications AB, Digital Ally Inc., [added: Duress,] Getac Technology Corporation, Halo Body Cameras, [added: Hikvision, Hytera, IONODES,] i-PRO, LensLock Inc., Motorola Solutions, [added: M-View, Oracle, Patrol Eyes, Pinnacle Response, Pro-Vision, Recoda,] Reveal Media, Safe Fleet, Utility Associates, Versaterm Inc., [added: WCCTV,] Wolfcom Enterprises, Wrap Technologies Inc. and Zepcam B.V., Applied Concepts Inc., Genetec Inc. and Insight LPR.

Our cloud-based digital evidence management system, Axon Evidence, competes with both cloud-based platforms and on-premises based systems designed by [removed: third-parties] [added: third parties] or developed internally by an agency's technology staff.

Key competitive factors in this product category include product performance, product features (including live-streaming, GPS tracking and pre-event buffering), battery life, product quality and warranty, total cost of ownership, data [removed: security, data and information workflows, company reputation and financial strength, and customer satisfaction and relationships.]

[removed: _Productivity] [added: *Productivity] and Real-Time Operations Software — Records Management System (“RMS”) and [removed: Computer Aided Dispatch (“CAD”):_] [added: Axon Fusus:*] The RMS [removed: and CAD verticals are highly] [added: vertical area is] competitive and highly fragmented.

Axon Enterprise, Inc. (“Axon,” the “Company,” “we” or “us”) is a technology leader in global public safety.

Our software offerings also support productivity and real-time operations.

The Software and Sensors segment includes the sale of sensors, including body cameras, in-car cameras, other hardware sensors, warranties on sensors, and other products, as well as recurring cloud-hosted software revenue, related non-recurring professional services revenue, and revenue from certain software, including on-premise licenses.

The TASER segment includes the manufacture and sale of CEDs, batteries, accessories and extended warranties, digital subscription training content, virtual reality ("VR") training content, TASER Evidence.com license revenue, and other professional services tied to TASER and VR deployments.

- 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

$1.0 billion1 as of December 31, 2024.

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.

Our productivity suite, which includes Axon Records and artificial intelligence ("AI"), is designed to save officers time spent writing reports and doing paperwork.

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.

Product categories within sensors include Axon Body cameras, Axon Fleet in-car systems, drones and robotics, and other devices that work with our software.

Our software solutions also support an open ecosystem of connected devices produced by other vendors.

- TASER: We develop smart devices, tools and services that support public safety officers in de-escalating situations, avoiding or minimizing use of force and aiding consumer personal protection.

These tools include TASER devices, VR 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 adopted by a majority of U.S. state and local law enforcement 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.

area of risk.

Despite past supply chain disruptions relating to material shortages and port constraints, we remain focused on actively managing our supply chain by strengthening strategic relationships, securing secondary and alternate sourcing, adjusting build plans, maintaining strategic inventory and utilizing flexible logistics to support growing demand while minimizing customer disruptions.

security, data and information workflows, company reputation and financial strength, and customer satisfaction and relationships.

*Draft One:* The AI-enabled report narrative drafting space is relatively new but fast growing.

We have identified a few providers in this space, including Abel, Blueline AI, GovWorx, Karda Analytics, Mark43’s ReportAI, Policereports.ai, and Truleo.

*Dedrone by Axon:* The counter drone space is fast growing and very fragmented.

Within it, Dedrone competes with Advanced Protection Systems, Anduril, ApolloShield, ARTSys360, Aselsan, Belgian Advanced Technology Systems, Big Bang Boom Solutions, Bligther Surveillance Systems, BlueHalo, BSS Holland, CACI, Cerbair, Chess Dynamics, DEFSYS, Department 13, D-Fend, DroneDefence, Droneshield, Dynamite Global Strategies, DZYNE Technologies, EDGE, EdgeSource, Elbit Systems, ELT Group, ESG, Fortem Technologies, FN Herstal, General Atomics, Gradiant, Guardion, Havelsan, Hensoldt, Hertz New Technologies, IEC Infrared Systems, Indra, L3 Harris, Leidos, Leonardo DRS, LiveLink Aerospace, Lockheed Martin, Marduk, MBDA, MC2 Technologies, Meteksan Savunma, Metis, MSI Defense Systems, MyDefence, Northrop Grumman, NSO Group, Openworks, QinetiQ, Raytheon, Regulus, Rheinmetall, SAAB, SAIC, SAMI Advanced Electronics, Securiton, Sensofusion, Sentrycs, Sentry View Systems, Skycope, Skylock, Skysafe,

SNC, Sopra Steria, SRC, Teledyne FLIR, Terma, Thales, TRD Systems, UAVOS, Unifly, Vector Solutions, Vigilant Drone Defense, Vorpal, Whitefox Defense, and Zen Technologies, among others.

Key competitive factors in this product category include the breadth and accuracy of detection sensors (e.g., pan-tilt-zoom cameras, radar, and acoustic) and multi-sensor fusion approaches, the chosen methodology for radio frequency-based detection (e.g., RF signature matching or RF demodulation), integration of detection platforms with robust mitigation solutions (e.g., jammers, cyber-takeover, kinetic and high-energy), the capacity to improve detection through scale and continuous exposure to diverse drone makes and models in areas of high drone activity (e.g., urban centers, active war zones) and the seamless interoperability with existing security and defense ecosystems

Our business operations are influenced by municipal budget cycles.

payment services.

Risk Factors – Legal and Compliance Risks” for additional details.

We have also recently started offering hardware sensors combined with software to detect, identify, track and mitigate drones through our acquisition of Dedrone.

Changes in laws, regulations, and interpretations outside of our control may result in our products being classified or reclassified as firearms.

If this were to occur, our private citizen demand could be substantially reduced because consumers would be required to comply with federal, state or local firearm transfer requirements prior to purchasing our product.

Risk Factors – Legal and Compliance Risks.”

Technology and Underwriters Laboratories.

We offer products and services that some jurisdictions determine to be “prohibited” or “controlled” weapons under applicable local arms brokering regulations.

Consequently, jurisdictions with such regulations, particularly those that are signatories to the Arms Trade Treaty, can require certain covered groups and our employees to receive weapons brokering licenses.

Brokering license issuance and approval is not always guaranteed and is subject to the applicable policy of the approving jurisdiction.

Denial or limitations on brokering activity can impact the ability of individual employees to proceed with weapons brokering activity in certain instances.

*Federal Procurement Regulations*

Axon Enterprise, Inc. (“Axon,” the “Company,” “we” or “us”) is a market-leading provider of law enforcement technology solutions with a mission to protect life in service of promoting peace, justice and strong institutions.

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

| | ● | Software: Axon is building a suite of cloud-based, SaaS solutions that integrate with our sensors and TASER devices to benefit customers and drive annual recurring revenue, which totaled $697 million[1](#footnote-2) as of December 31, 2023. 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. Our productivity suite, which includes Axon Records, is designed to save officers time spent writing reports and doing paperwork. 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. |

| | ● | TASER: We develop smart devices, tools and services that support public safety officers in de-escalating situations, avoiding or minimizing use of force and aiding consumer personal protection. These tools include TASER devices, virtual reality (“VR”) 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 adopted by a majority of U.S. state and local law enforcement 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 are diversifying into new markets by adding new types of customer profiles, or users, and by adding to our core customer base.

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

*​*

We have historically experienced higher net sales in our fourth quarter compared to other quarters in our fiscal year due primarily to municipal budget cycles.

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

federal, state or local firearm transfer requirements prior to purchasing TASER 10.

As of

Any failures to comply could result in significant expenses, delays or fines and could adversely affect our financial results.

Our employees are not covered by any collective bargaining agreement, and we have never experienced a work stoppage.

We believe that our relations with our employees are strong.

_Diversity and Inclusion_

We embrace diversity, equity and inclusion.

A truly innovative workforce needs to be diverse, leverage the skills and perspectives of a wealth of backgrounds and experiences, and ensure that all employees are equitably empowered to succeed.

We continue to focus on the hiring, retention, development and advancement of women and underrepresented communities.

We are focused on recruiting diverse candidates and on internal talent development of our diverse leaders so that they can advance their careers and move into leadership positions.

Our Employee Resource Groups (“ERGs”) are company-sponsored, employee-led communities that address specific needs, priorities and barriers to success for each community of focus.

These groups provide a forum for employees to discuss problems and craft solutions for each community of focus, while also creating leadership and professional development opportunities for members.

Throughout 2023 we continued to see active participation in all six of our ERGs — Axon Allies for LGBTQ+ employees, APIA for Asian Pacific Islander employees, HOLA for Hispanic employees, Axon Mosaic for Black employees, Axon Vets for service veterans, and Women at Axon.

Each group is inclusive of employees who identify as members of each community, as well as allies.

We believe that our ability to retain our workforce is dependent upon fostering an environment that is sustainably safe, respectful, fair and inclusive of everyone and promotes diversity, equity and inclusion inside and outside of our business.

Internally, we continue to listen to our employees with town hall sessions, provide expert-led webinars and host community round tables.

In 2022, we formed the Ethics & Equity Advisory Council (“EEAC”) to ensure that ethics and equity are at the forefront of our services and product development.

The EEAC functions as an impartial advocate for marginalized voices, actively engaging in partnership spaces such as conferences and community events.

EEAC members offer critical evaluations of Axon’s products in accordance with ethical standards and aid in training product managers on equitable development practices.

While EEAC members play a crucial role in providing feedback and shaping product development, it is important to note that they do not define Axon’s ethical guidelines, approve or disprove product development, engage in sales activities, or serve as the exclusive source of community perspectives or recommendations.

To promote mental and emotional wellbeing, all full-time employees are provided free access by Axon to Modern Health.

Modern Health is a 24/7 resource that includes individualized virtual coaching and therapy in addition to access to articles and activities offering guidance on maintaining emotional balance.

Additionally, we have a Wellness Incentive Program for our domestic employees that incentivizes healthy lifestyles.

The program rewards employees for completing a variety of well-being activities that help foster their financial wellness, mental health, social wellbeing, community engagement and nutrition.

The information on our website, including information about our trademarks, is not incorporated by reference into or otherwise a part of this Annual Report on Form 10-K.

See discussion of litigation in Note [removed: 12 to the consolidated financial statements] [added: 13] included in Part II, Item 8 of this Annual Report on Form 10-K, which discussion is incorporated by reference herein.

[removed: Form 10-K][added: Form 10-K]

| [removed: ⌧] [added: x] | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended December 31, 2023][added: ended December 31, 2024]

| [removed: ◻] [added: o] | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission File [removed: Number: 001-16391​][added: Number: 001-16391]

| [added: Delaware] (State or other jurisdiction of [added: incorporation or organization)] | [removed: ​] | [added: | 86-0741227] (I.R.S. Employer [added: Identification No.)] | [added: | |]

| 17800 North 85th Street | [removed: ​] | [added: |] 85255 | [added: | |]

| [removed: Scottsdale, Arizona] [added: Scottsdale, Arizona] | [removed: ​] | [added: |] (Zip Code) | [added: | |]

| (Address of principal executive offices) | [removed: ​] | [removed: ​] | [added: | | |]

[removed: (480) 991-0797][added: (480) 991-0797]

| Title of each class | [added: | |] Trading Symbol(s) | [added: | |] Name of exchange on which registered | [added: | |]

| Common Stock, $0.00001 par value per share | [added: | |] AXON | [added: | |] The NASDAQ [removed: Global Select] [added: Stock] Market [added: LLC] | [added: | |]

Yes [removed: ☒] [added: x] No [removed: ☐][added: o]

Yes [removed: ☐] [added: o] No [removed: ☒][added: x]

| Large accelerated filer | [removed: ☒] | [removed: ​] | [added: x | | | | | |] Accelerated [removed: filer☐] [added: filer] | [added: | | o | | |]

| Non-accelerated filer | [removed: ☐] | [removed: ​] | [added: o | | | | | |] Smaller reporting [removed: company☐] [added: company] | [added: | | o | | |]

| [removed: ​] | [removed: ​] | [removed: ​] | [added: | | | | | |] Emerging growth [removed: company☐] [added: company] | [added: | | o | | |]

As of June 30, [removed: 2023,] [added: 2024,] the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately [removed: $14.3] [added: $21.8] billion based on the closing sale price as reported on The NASDAQ [removed: Global Select Market.][added: Stock Market LLC.]

The number of shares of the registrant’s common stock outstanding as of February [removed: 23, 2024] [added: 24, 2025] was [removed: 75,302,832][added: 76,623,266]

Parts of the registrant’s definitive proxy statement for its [removed: 2024] [added: 2025] Annual Meeting of Shareholders to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, [removed: 2023] [added: 2024] are incorporated by reference into Part III of this Form 10-K.

[removed: AXON] [added: AXON] ENTERPRISE, [removed: INC.][added: INC.]

[removed: INDEX] [added: INDEX] TO ANNUAL REPORT ON FORM [removed: 10-K][added: 10-K]

[removed: FOR] [added: FOR] THE YEAR ENDED DECEMBER 31, [removed: 2023][added: 2024]

| [removed: ​] | [removed: [PART I](#PARTI_648037)] | | [added: [PART I](#i8176d44807d94bf2b1a819806cdc1f3c_10) | | |] Page | [added: | |]

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| [Item [removed: 1A.](#Item1ARiskFactors_991490)] [added: 1A.](#i8176d44807d94bf2b1a819806cdc1f3c_16)] | [added: | |] [Risk [removed: Factors](#Item1ARiskFactors_991490)] [added: Factors](#i8176d44807d94bf2b1a819806cdc1f3c_16)] | [removed: ​] | [removed: 15] | [added: [13](#i8176d44807d94bf2b1a819806cdc1f3c_16) | | |]

| [Item [removed: 1B.](#Item1BUnresolvedStaffComments_129436)] [added: 1B.](#i8176d44807d94bf2b1a819806cdc1f3c_19)] | [added: | |] [Unresolved Staff [removed: Comments](#Item1BUnresolvedStaffComments_129436)] [added: Comments](#i8176d44807d94bf2b1a819806cdc1f3c_19)] | [removed: ​] | [removed: 39] | [added: [38](#i8176d44807d94bf2b1a819806cdc1f3c_19) | | |]

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| [Item [removed: 2.](#Item2Properties_797324)] [added: 2.](#i8176d44807d94bf2b1a819806cdc1f3c_25)] | [removed: [Properties](#Item2Properties_797324)] | [removed: ​] | [removed: 43] [added: [Properties](#i8176d44807d94bf2b1a819806cdc1f3c_25)] | [added: | | [41](#i8176d44807d94bf2b1a819806cdc1f3c_25) | | |]

| [Item [removed: 3.](#Item3LegalProceedings_457143)] [added: 3.](#i8176d44807d94bf2b1a819806cdc1f3c_28)] | [added: | |] [Legal [removed: Proceedings](#Item3LegalProceedings_457143)] [added: Proceedings](#i8176d44807d94bf2b1a819806cdc1f3c_28)] | [removed: ​] | [removed: 43] | [added: [41](#i8176d44807d94bf2b1a819806cdc1f3c_28) | | |]

| [Item [removed: 4.](#Item4MineSafetyDisclosures_619104)] [added: 4.](#i8176d44807d94bf2b1a819806cdc1f3c_31)] | [added: | |] [Mine Safety [removed: Disclosures](#Item4MineSafetyDisclosures_619104)] [added: Disclosures](#i8176d44807d94bf2b1a819806cdc1f3c_31)] | [removed: ​] | [removed: 43] | [added: [41](#i8176d44807d94bf2b1a819806cdc1f3c_31) | | |]

[removed: | ​ | [PART II](#Part_II) | ​ | ​ |][added: PART I]

| [Item [removed: 5.](#Item_5_Markets)] [added: 5.](#i8176d44807d94bf2b1a819806cdc1f3c_37)] | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#Item_5_Markets)] [added: Securities](#i8176d44807d94bf2b1a819806cdc1f3c_37)] | [removed: ​] | [removed: 43] | [added: [41](#i8176d44807d94bf2b1a819806cdc1f3c_37) | | |]

| [Item [removed: 6.](#Item_6_Reserved)] [added: 6.](#i8176d44807d94bf2b1a819806cdc1f3c_40)] | [removed: [\[Reserved\]](#Item_6_Reserved)] | [removed: ​] | [removed: 44] [added: [\[Reserved\]](#i8176d44807d94bf2b1a819806cdc1f3c_40)] | [added: | | [42](#i8176d44807d94bf2b1a819806cdc1f3c_40) | | |]

| [Item [removed: 7.](#Item7ManagementsDiscussionandAnalysisofF)] [added: 7.](#i8176d44807d94bf2b1a819806cdc1f3c_43)] | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#Item7ManagementsDiscussionandAnalysisofF)] [added: Operations](#i8176d44807d94bf2b1a819806cdc1f3c_43)] | [removed: ​] | [removed: 45] | [added: [43](#i8176d44807d94bf2b1a819806cdc1f3c_43) | | |]

| [Item [removed: 7A.](#Item7AQuantitativeandQualitativeDisclosu)] [added: 7A.](#i8176d44807d94bf2b1a819806cdc1f3c_64)] | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#Item7AQuantitativeandQualitativeDisclosu)] [added: Risk](#i8176d44807d94bf2b1a819806cdc1f3c_64)] | [removed: ​] | [removed: 61] | [added: [56](#i8176d44807d94bf2b1a819806cdc1f3c_64) | | |]

| [Item [removed: 8.](#Item8FinancialStatementsandSupplementary)] [added: 8.](#i8176d44807d94bf2b1a819806cdc1f3c_67)] | [added: | |] [Financial Statements and Supplementary [removed: Data](#Item8FinancialStatementsandSupplementary)] [added: Data](#i8176d44807d94bf2b1a819806cdc1f3c_67)] | [removed: ​] | [removed: 62] | [added: [57](#i8176d44807d94bf2b1a819806cdc1f3c_67) | | |]

| [Item [removed: 9.](#Item9ChangesinandDisagreementsWithAccoun)] [added: 9.](#i8176d44807d94bf2b1a819806cdc1f3c_151)] | [added: | |] [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#Item9ChangesinandDisagreementsWithAccoun)] [added: Disclosure](#i8176d44807d94bf2b1a819806cdc1f3c_151)] | [removed: ​] | [removed: 104] | [added: [112](#i8176d44807d94bf2b1a819806cdc1f3c_151) | | |]

| [Item [removed: 9A.](#Item9AControlsandProcedures_674546)] [added: 9A.](#i8176d44807d94bf2b1a819806cdc1f3c_154)] | [added: | |] [Controls and [removed: Procedures](#Item9AControlsandProcedures_674546)] [added: Procedures](#i8176d44807d94bf2b1a819806cdc1f3c_154)] | [removed: ​] | [removed: 104] | [added: [112](#i8176d44807d94bf2b1a819806cdc1f3c_154) | | |]

| [Item [removed: 9B.](#Item9BOtherInformation_873177)] [added: 9B.](#i8176d44807d94bf2b1a819806cdc1f3c_157)] | [added: | |] [Other [removed: Information](#Item9BOtherInformation_873177)] [added: Information](#i8176d44807d94bf2b1a819806cdc1f3c_157)] | [removed: ​] | [removed: 107] | [added: [114](#i8176d44807d94bf2b1a819806cdc1f3c_157) | | |]

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_________________________________________________________________

_________________________________________________________________

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Yes x No o

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Yes o No x

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| | | | [PART III](#i8176d44807d94bf2b1a819806cdc1f3c_163) | | | | | |

| | | | [PART IV](#i8176d44807d94bf2b1a819806cdc1f3c_181) | | | | | |

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| ​ | ​ | ​ |

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| Delaware | | 86-0741227 |

| incorporation or organization) | ​ | Identification No.) |

| ​ | ​ | ​ | ​ |

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

| ​ | [PART III](#PARTIII_598328) | ​ | ​ |

| ​ | [PART IV](#PARTIV_881307) | ​ | ​ |

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 risks 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 condition will be materially adversely affected. |

| | ● | If our TASER conducted energy devices (“CEDs”) do not continue to be widely accepted, our growth prospects, operating results and financial condition 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. |

| | ● | Negative publicity could adversely impact sales, which could cause our revenues or operating results to decline. |

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

| | ● | Our failure to retain executive officers, including 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. |

| | ● | If our security measures or those of our third-party providers, including cloud storage providers, are breached and unauthorized access is obtained to customers’ data or our data, our network, data centers and service may be perceived as not being secure, customers may curtail or stop using our products and services, and we may incur significant legal and financial exposure and liabilities. |

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

| | ● | Uncertainty in the development, deployment and use of artificial intelligence (“AI”) in our products and services, as well as our business more broadly, could adversely affect our business and reputation. |

| | ● | Defects or disruptions in our services could impact demand for our services and subject us to substantial liability. |

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

| | ● | Our international operations expose us to additional risks that could harm our business, operating results and financial condition. |

| | ● | We depend on our ability to attract and retain our key management, sales and technical personnel. |

| | ● | If we fail to comply with federal, state or local regulations applicable to TASER 10, we may be subject to governmental actions or litigation that could materially harm our business. |

| | ● | If we fail to maintain effective internal control over financial reporting or identify a material weakness or significant deficiency, our ability to accurately and timely report our financial condition and results of operations could be adversely affected, investor confidence could diminish, and the value of our common stock may decline. |

[removed: The Company’s] [added: Our] Information Security Team maintains the program, which is designed to ensure proper monitoring, prevention, detection, mitigation and remediation of cybersecurity vulnerabilities, including the prompt investigation and management of all reported or discovered security events, including cybersecurity threats and incidents, in [removed: the] [added: our] ordinary course of [removed: the business of the Company.][added: business.]

Our cybersecurity and information security [removed: program is] [added: programs are] designed to comply with key global financial regulations and cybersecurity laws in the jurisdictions in which we operate.

[removed: | | ● |] [added: -] closely monitor emerging data protection laws and implement changes to our processes designed to comply; [removed: |]

[removed: | | ● |] [added: -] undertake regular reviews (at least annually) of our consumer facing and internal policies and statements related to cybersecurity; [removed: |]

[removed: | | ● |] [added: -] proactively inform our customers of substantive changes related to customer data handling; [removed: |]

[removed: | | ● |] [added: -] conduct annual information security training for all [removed: our] employees; [removed: |]

[removed: | | ● |] [added: -] recruit and retain highly skilled cybersecurity professionals, and provide regular training and development opportunities for our cybersecurity and information security employees; [removed: |]

[removed: | | ● |] [added: -] conduct regular phishing email simulations for all employees and all contractors with access to corporate email systems to enhance awareness and responsiveness to such possible threats; [removed: |]

[removed: | | ● |] [added: -] through policy, practice and contract (as applicable), require employees, as well as third parties who provide services on our behalf, to treat customer information and data with care; [removed: |]

[removed: | | ● |] [added: -] perform due diligence on third-party vendors and, based on our risk assessment, put in place contractual undertakings and oversight to manage and reduce the risks associated with third-party vendors; [removed: |]

[removed: | | ● |] [added: -] run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our technologies, methods and processes; [removed: |]

[removed: | | ● |] [added: -] conduct regular risk assessments of our information systems to identify weaknesses, and develop and implement mitigations to improve our cybersecurity and information security program; [removed: |]

[removed: | | ● |] [added: -] conduct regular security assessments, vulnerability scans, and penetration tests (including by third-party assessment firms) of products systems and internal systems to discover vulnerabilities and apply appropriate mitigations within standardized timelines; [removed: |]

[removed: | | ● |] [added: -] maintain, implement, evaluate and update our cybersecurity technologies to address threats and vulnerabilities; and [removed: |]

[removed: | | ● |] [added: -] carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident. [removed: |]

[removed: _Third Party] [added: *Third-Party] Monitoring and External [removed: Reviews_][added: Reviews*]

[removed: _Cybersecurity] [added: *Cybersecurity] Management [removed: Team_][added: Team*]

Our current CISO has served in various information technology and information security roles over the past 20 [removed: years, having built the Company’s information security program over the last 10 years,] [added: years including roles at Netflix, Salesforce] and [removed: serving] [added: Facebook, and has served] as CISO since [removed: December 2017.][added: February 2024.]

Our CISO attends quarterly meetings of [removed: the Company’s] [added: our] Disclosure Committee and provides input on [removed: the Company’s] disclosures in [removed: its] [added: our] Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, including the relevant risk factors set forth therein.

[removed: The Company’s] [added: Our] CISO, along with the Information Security Team, also leads our Security Incident Response Team, which is responsible for investigating suspected cybersecurity threats and incidents.

In the event of a possibly material cybersecurity incident, the Information Security Team also includes the following executive team members: Corporate General Counsel, Chief Legal Officer, Chief Accounting Officer, Chief [added: Operating Officer & Chief] Financial Officer and, to the extent practicable or relevant, other senior executives.

[removed: _Board] [added: *Board] of Directors [removed: Oversight_][added: Oversight*]

As a part of its oversight of the key risks facing [removed: the Company,] [added: Axon,] our Board of Directors devotes significant time and attention to data and systems protection, including cybersecurity and information security risk.

While the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) reviews any significant legal, compliance or regulatory matters that may have a material impact on [removed: the Company’s] [added: our] business, financial statements or compliance policies generally, it does so in consultation with our ERC Committee with respect to any such matters that involve cybersecurity, data privacy or information technology.

The ERC Committee and its Chair, in coordination with the Information Security Team and CISO, regularly review the categories of risk the Company faces, including any cybersecurity risk exposures, as well as the [removed: likelihood of occurrence, the potential impact of those risks, and the steps management has taken to monitor, mitigate and control such exposures.]

To facilitate these reviews, the Information Security Team and CISO report at least quarterly to the ERC Committee with respect to cybersecurity risks, including those identified through review of our business, of rising threats in the industry, and of the current state of [removed: the Company’s] [added: our] cybersecurity and information security program.

[removed: _Incident] [added: *Incident] Response and Assessment Policies and [removed: Procedures_][added: Procedures*]

*Cybersecurity Risk Management and Strategy*

He also has relevant degrees and certifications, including a Master of Science degree in Information Assurance from Iowa State University.

The information security program has been built over the last 10 years under the leadership of experienced Information Security professionals.

likelihood of occurrence, the potential impact of those risks, and the steps management has taken to monitor, mitigate and control such exposures.

For additional details, refer to Item 1A in Part I of this Annual Report on Form 10-K.

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

We expect our current CISO to transition his responsibilities to our new CISO over the coming quarter.

Our new CISO brings diverse perspectives and significant skills and experience leading security organizations across a number of technology companies.

See “_Risk Factors—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, data centers and products and services may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities_” and “_Risk Factors—Catastrophic events could materially adversely affect our business, results of operations and/or financial condition._”

As of December 31, [removed: 2023,] [added: 2024,] we had more than [removed: 15] [added: 31] leased locations including Phoenix and Scottsdale, Arizona; East [removed: Point,] [added: Point and Peachtree,] Georgia; Seattle, Washington; [added: Boston, Massachusetts; San Francisco, California; Westerville, Ohio; Washington, D.C,;] Melbourne and Sydney, Australia; Brussels, Belgium; Daventry and London, England; Tampere, Finland; [removed: Frankfurt,] [added: Dietzenbach and Kassel,] Germany; Delhi, India; Amsterdam, Netherlands; [removed: and] Ho Chi Minh [removed: City, Vietnam.][added: City and Hanoi, Vietnam; Athens, Greece; Madrid, Spain; Rome, Italy; Toronto, Canada; and Odense, Denmark.]

We also own a parcel of land located in Scottsdale, [removed: Arizona on which we intend to develop a new campus.][added: Arizona.]

To the extent that we [added: continue to grow and] introduce new products in the future, we will [removed: likely] need to acquire additional facilities to locate the associated production lines.

The majority of our locations support both of our reportable segments, except for our [removed: Vietnam] [added: Vietnam, Finland,] and Seattle, Washington locations, which primarily support our Software & Sensors segment.

Our primary corporate headquarters are spread across five facilities and approximately 400,000 square feet in the Phoenix, Arizona metropolitan area.

Our corporate headquarters and manufacturing facilities are based in an approximately 100,000 square foot facility in Scottsdale, Arizona, which we own.

[removed: PART II][added: PART II]

[removed: Market Information][added: Market Information]

Our common stock is quoted under the symbol “AXON” on The NASDAQ [removed: Global Select Market.][added: Stock Market LLC]

[removed: Holders][added: Holders]

As of [removed: December 31, 2023,] [added: February 24, 2025,] there were [removed: 209] [added: 203] holders of record of our common stock.

[removed: Dividends][added: Dividends]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

During the year ended December 31, [removed: 2023,] [added: 2024,] no common [added: shares were purchased under the program.]

As of December 31, [removed: 2023,] [added: 2024,] $16.3 million remained available under the plan for future purchases.

[removed: Stock] [added: Stock] Performance [removed: Graph][added: Graph]

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

The graph covers the period from December 31, [removed: 2018] [added: 2019] to December 31, [removed: 2023.][added: 2024.]

The graph assumes that the value of the investment in our stock and in each index was $100 at December 31, [removed: 2018,] [added: 2019,] and that all dividends were reinvested.

[removed: ][added: ]

| [removed: ​] | | [removed: 2018] | [added: 2019] | | [removed: 2019] | | | [added: |] 2020 | | | [added: | | |] 2021 | | | [added: | | |] 2022 | | | [added: | | |] 2023 | | [added: | | | | 2024 | | |]

Index data copyright [removed: NASDAQ; Russell Investments;] [added: NASDAQ] and Standard and Poor’s, Inc. Used with permission.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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

| Axon Enterprise, Inc. | | | $ | 100.00 | | | | | $ | 167.21 | | | | | $ | 214.25 | | | | | $ | 226.41 | | | | | $ | 352.44 | | | | | $ | 810.73 | |

| NASDAQ Composite | | | 100.00 | | | | | | 144.92 | | | | | | 177.06 | | | | | | 119.45 | | | | | | 172.77 | | | | | | 223.87 | | |

| S&P 500 | | | 100.00 | | | | | | 118.40 | | | | | | 152.39 | | | | | | 124.79 | | | | | | 157.59 | | | | | | 197.02 | | |

shares were purchased under the program.

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

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

| Axon Enterprise, Inc. | ​ | $ | 100.00 | ​ | $ | 167.50 | ​ | $ | 280.07 | ​ | $ | 358.86 | ​ | $ | 379.22 | ​ | $ | 590.32 |

| NASDAQ Composite | ​ | ​ | 100.00 | ​ | ​ | 136.69 | ​ | ​ | 198.10 | ​ | ​ | 242.03 | ​ | ​ | 163.28 | ​ | ​ | 236.17 |

| Russell 2000 | ​ | ​ | 100.00 | ​ | ​ | 125.52 | ​ | ​ | 150.58 | ​ | ​ | 172.90 | ​ | ​ | 137.56 | ​ | ​ | 160.85 |

| Russell Midcap Index | ​ | ​ | 100.00 | ​ | ​ | 130.54 | ​ | ​ | 152.87 | ​ | ​ | 187.39 | ​ | ​ | 154.94 | ​ | ​ | 181.63 |

| S&P 500 | ​ | ​ | 100.00 | ​ | ​ | 131.49 | ​ | ​ | 155.68 | ​ | ​ | 200.37 | ​ | ​ | 164.08 | ​ | ​ | 207.21 |

We have historically included the Russell 2000 and Russell Midcap as a point of reference in our Comparative Stock Performance chart; however, we have made the decision to remove the Russell 2000 and Russell Midcap from this chart beginning with our Annual Report on Form 10-K for the year ended December 31, 2024.

| Index to Consolidated Financial Statements | | [added: | | | |] Page | [added: | |]

| [Consolidated Balance Sheets as of December 31, [removed: 2023] [added: 2024] and [removed: 2022](#CONSOLIDATEDBALANCESHEETS_305970)] [added: 2023](#i8176d44807d94bf2b1a819806cdc1f3c_70)] | [removed: ​] | [removed: 63] | [added: | | | [58](#i8176d44807d94bf2b1a819806cdc1f3c_70) | | |]

| [Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, [added: 2024,] 2023, [removed: 2022,] and [removed: 2021](#CONSOLIDATEDSTATEMENTSOFOPERATIONSANDCOM)] [added: 202](#i8176d44807d94bf2b1a819806cdc1f3c_73)2] | [removed: ​] | [removed: 64] | [added: | | | 62 | | |]

| [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [added: 2024,] 2023, [removed: 2022,] and [removed: 2021](#CONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUI)] [added: 202](#i8176d44807d94bf2b1a819806cdc1f3c_76)2] | [removed: ​] | [removed: 65] | [added: | | | 63 | | |]

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2023, 2022,] [added: 202](#i8176d44807d94bf2b1a819806cdc1f3c_79)[4](#i8176d44807d94bf2b1a819806cdc1f3c_79)[, 202](#i8176d44807d94bf2b1a819806cdc1f3c_79)[3](#i8176d44807d94bf2b1a819806cdc1f3c_79)[,] and [removed: 2021](#CONSOLIDATEDSTATEMENTSOFCASHFLOWS_558214)] [added: 202](#i8176d44807d94bf2b1a819806cdc1f3c_79)[2](#i8176d44807d94bf2b1a819806cdc1f3c_79)] | [removed: ​] | [removed: 66] | [added: | | | [61](#i8176d44807d94bf2b1a819806cdc1f3c_79) | | |]

| [Notes to Consolidated Financial [removed: Statements](#a1OrganizationandSummaryofSignificantAcc)] [added: Statements](#i8176d44807d94bf2b1a819806cdc1f3c_82)] | [removed: ​] | [removed: 67] | [added: | | | [62](#i8176d44807d94bf2b1a819806cdc1f3c_82) | | |]

| [Report of Grant Thornton LLP, Independent Registered Public Accounting Firm (PCAOB ID [removed: No.](#REPORTOFINDEPENDENTREGISTEREDPUBLICACCOU) 248)] [added: No. 248)](#i8176d44807d94bf2b1a819806cdc1f3c_1649267442375)] | [removed: ​] | [removed: 102] | [added: | | | 105 | | |]

[removed: AXON] [added: AXON] ENTERPRISE, [removed: INC.][added: INC.]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

| [removed: ​] | [removed: ​] | [added: | 2024 | | | | | |] 2023 | | [removed: ​] | [added: | | |] 2022 | | [added: |]

| ASSETS | | [removed: ​] | | | [removed: ​] | | [added: | | | | |]

| Current assets: | | [removed: ​] | | | [removed: ​] | | [added: | | | | |]

| Cash and cash equivalents | [removed: ​] | [added: |] $ | [added: 454,844 | | | | | $ |] 598,545 | [removed: ​] | [added: | | |] $ | 353,684 | [added: |]

| Marketable securities | [removed: ​] | [removed: ​] | [removed: 77,940] [added: 198,270] | [removed: ​] | [removed: ​] | [removed: 39,240] | [added: | | 77,940 | | |]

| Short-term investments | [removed: ​] | | [removed: 644,054] [added: 333,235] | [removed: ​] | | [removed: 581,769] | [added: | | 644,054 | | |]

| Accounts and notes receivable, net of allowance of $2,392 [removed: and $2,176] as of December 31, 2023 [removed: and December 31, 2022, respectively] | [removed: ​] | | [added: | | | $ |] 417,690 | [removed: ​] | | [removed: 358,190] | [added: | $ | (4,729) | | | | | $ | 412,961 | |]

| Contract assets, net | [removed: ​] | | [added: | | |] 275,779 | [removed: ​] | | [removed: 196,902] | [added: | | 11,453 | | | | | | 287,232 | | |]

| Inventory | [removed: ​] | | [removed: 269,855] [added: 265,316] | [removed: ​] | | [removed: 202,471] | [added: | | 269,855 | | |]

| Prepaid expenses and other current assets | [removed: ​] | | [added: | | |] 112,786 | [removed: ​] | | [removed: 73,022] | [added: | | (9,731) | | | | | | 103,055 | | |]

| Total current assets | [removed: ​] | | [added: | | |] 2,396,649 | [removed: ​] | | [removed: 1,805,278] | [added: | | (3,007) | | | | | | 2,393,642 | | |]

| Property and equipment, net | [removed: ​] | | [removed: 200,533] [added: 247,324] | [removed: ​] | | [removed: 169,843] | [added: | | 200,533 | | |]

| Deferred tax assets, net | [removed: ​] | | [added: | | |] 229,513 | [removed: ​] | | [removed: 156,866] | [added: | | (1,729) | | | | | | 227,784 | | |]

| Intangible assets, net | [removed: ​] | | [removed: 19,539] [added: 175,157] | [removed: ​] | | [removed: 12,158] | [added: | | 19,539 | | |]

| Goodwill | [removed: ​] | | [removed: 57,945] [added: 756,838] | [removed: ​] | | [removed: 44,983] | [added: | | 57,945 | | |]

| Long-term notes receivable, net | [removed: ​] | | [removed: 2,588] [added: 3,460] | [removed: ​] | | [removed: 5,210] | [added: | | 2,588 | | |]

| Long-term contract assets, net | [removed: ​] | [removed: ​] | [added: | | |] 77,710 | [removed: ​] | [removed: ​] | [removed: 45,170] | [added: | | 6,672 | | | | | | 84,382 | | |]

| Strategic investments | [removed: ​] | [removed: ​] | [removed: 231,730] [added: 332,550] | [removed: ​] | [removed: ​] | [removed: 296,563] | [added: | | 231,730 | | |]

| Other long-term assets | [removed: ​] | | [added: | | |] 220,638 | [removed: ​] | | [removed: 159,616] | [added: | | (29,607) | | | | | | 191,031 | | |]

| Total assets | [removed: ​] | [removed: $] | [added: | | |] 3,436,845 | [removed: ​] | [removed: $] | [removed: 2,851,894] | [added: | | (27,671) | | | | | | 3,409,174 | | |]

| LIABILITIES AND STOCKHOLDERS’ EQUITY | [removed: ​] | | [removed: ​] | [removed: ​] | | | [added: | | | | |]

| Current liabilities: | [removed: ​] | | | [removed: ​] | | | [added: | | | | |]

| Accounts payable | [removed: ​] | [removed: $] | [added: | | |] 88,326 | [removed: ​] | [removed: $] | [removed: 59,918] | [added: | | (22,474) | | | | | | 65,852 | | |]

| Accrued liabilities | [removed: ​] | | [added: | | |] 188,230 | [removed: ​] | | [removed: 155,934] | [added: | | 5,320 | | | | | | 193,550 | | |]

| Current portion of deferred revenue | [removed: ​] | | [added: | | |] 491,691 | [removed: ​] | | [removed: 360,037] | [added: | | (21,276) | | | | | | 470,415 | | |]

| Customer deposits | [removed: ​] | | [removed: 21,935] [added: 20,626] | [removed: ​] | | [removed: 20,399] | [added: | | 21,935 | | |]

| Other current liabilities | [removed: ​] | | [removed: 9,787] [added: 12,857] | [removed: ​] | | [removed: 6,358] | [added: | | 9,787 | | |]

| Total current liabilities | [removed: ​] | | [added: | | |] 799,969 | [removed: ​] | | [removed: 602,646] | [added: | | (38,430) | | | | | | 761,539 | | |]

| Deferred revenue, net of current portion | [removed: ​] | | [added: | | |] 281,852 | [removed: ​] | | [removed: 248,003] | [added: | | (10,951) | | | | | | 270,901 | | |]

| Liability for unrecognized tax benefits | [removed: ​] | | [removed: 18,049] [added: 25,007] | [removed: ​] | | [removed: 10,745] | [added: | | 18,049 | | |]

| Long-term deferred compensation | [removed: ​] | | [removed: 11,342] [added: 15,877] | [removed: ​] | | [removed: 6,285] | [added: | | 11,342 | | |]

| | | | | | | | | |

| [Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm (PCAOB ID No.](#i8176d44807d94bf2b1a819806cdc1f3c_148) 238) | | | | | | 103 | | |

| | | | | | | | | | | | |

| Accounts and notes receivable, net of allowance of $3,322 and $2,392 as of December 31, 2024 and December 31, 2023, respectively | | | 547,572 | | | | | | 412,961 | | |

| Contract assets, net | | | 367,929 | | | | | | 287,232 | | |

| Prepaid expenses and other current assets | | | 130,315 | | | | | | 103,055 | | |

| Total current assets | | | 2,297,481 | | | | | | 2,393,642 | | |

| Deferred tax assets, net | | | 304,282 | | | | | | 227,784 | | |

| Long-term contract assets, net | | | 119,876 | | | | | | 84,382 | | |

| Other long-term assets | | | 237,620 | | | | | | 191,031 | | |

| Total assets | | | $ | 4,474,588 | | | | | $ | 3,409,174 | |

| Accounts payable | | | $ | 71,955 | | | | | $ | 65,852 | |

| Accrued liabilities | | | 279,193 | | | | | | 193,550 | | |

| Current portion of deferred revenue | | | 612,955 | | | | | | 470,415 | | |

| Total current liabilities | | | 997,586 | | | | | | 761,539 | | |

| Deferred revenue, net of current portion | | | 360,685 | | | | | | 270,901 | | |

| Other long-term liabilities | | | 26,096 | | | | | | 20,915 | | |

| Total liabilities | | | 2,146,923 | | | | | | 1,793,409 | | |

| Retained earnings | | | 812,014 | | | | | | 434,980 | | |

| Total stockholders’ equity | | | 2,327,665 | | | | | | 1,615,765 | | |

| Total liabilities and stockholders’ equity | | | $ | 4,474,588 | | | | | $ | 3,409,174 | |

AXON ENTERPRISE, INC.