Axon Enterprise Inc. (NASDAQ:AXON)

The financial data reveals significant volatility in both reported and adjusted net income over the five-year period ending December 31, 2022.

Reported Net Income (Loss)

There is a notable decline from a positive net income of 29,205 thousand US dollars in 2018 to a marginal positive of 882 thousand US dollars in 2019, followed by a shift to net losses of 1,724 thousand US dollars in 2020 and a substantially larger loss of 60,018 thousand US dollars in 2021. This downward trend is reversed dramatically in 2022 with a significant jump to a reported net income of 147,139 thousand US dollars.

Adjusted Net Income (Loss)

Adjusted figures closely mirror the reported net income figures with a slight variation in 2021, where adjusted net loss is marginally higher at 60,225 thousand US dollars compared to the reported loss of 60,018 thousand US dollars. The adjusted net income also reflects the substantial recovery observed in 2022, recording 146,095 thousand US dollars, close to the reported figure.

Overall, the data demonstrates a period of decline and losses during 2019 through 2021, followed by a robust recovery in 2022. The adjustments appear to have minimal impact on the net income values, indicating that the primary trends are consistent whether reported or adjusted figures are considered.

The financial performance indicators exhibit considerable volatility throughout the observed periods, displaying significant fluctuations in profitability and efficiency metrics.

Net Profit Margin

The net profit margin started relatively strong at approximately 6.95% in 2018, sharply declined to near breakeven in 2019 and 2020, turning slightly negative in 2020. It worsened further in 2021 to around -6.95%, indicating substantial losses that year. However, the margin rebounded markedly in 2022, achieving a robust positive margin of approximately 12.3%. The adjusted net profit margin closely follows the reported figures, suggesting limited impact from adjustments on profitability trends.

Return on Equity (ROE)

ROE showed a pattern mirroring the net profit margin, beginning at a modest 6.25% in 2018, declining precipitously to nearly zero by 2019 and dipping into negative territory in 2020 at about -0.18%. The negative trend intensified in 2021 with a return of around -5.73%, reflecting diminished shareholder value. A strong recovery was seen in 2022 with ROE climbing back to approximately 11.6%, signaling improved effectiveness in generating returns for shareholders. The adjusted ROE values track almost identically, indicating consistent adjustments over the years.

Return on Assets (ROA)

ROA similarly decreased from a positive 4.06% in 2018 to near zero and negative levels in 2019 and 2020, reaching approximately -0.12% in 2020. The most significant negative performance occurred in 2021 at nearly -3.56%, suggesting suboptimal use of assets during that year. The figure subsequently improved substantially to a positive 5.16% in 2022. The adjusted ROA mirrors the reported values closely, underscoring that asset efficiency remained consistent when adjusting for extraordinary items or investments.

In summary, the company experienced a challenging period from 2019 through 2021, marked by declining profitability and returns that culminated in losses and negative returns on equity and assets. The subsequent year, 2022, showed a pronounced recovery across all key financial ratios, surpassing earlier profitable levels noted in 2018. The close alignment between reported and adjusted figures suggests that the core financial performance trends are reliable and not materially affected by one-time adjustments or investment considerations.

The financial data show significant fluctuations in both reported and adjusted net income for the periods analyzed. In 2018, the company achieved a positive reported net income of approximately $29.2 million, which drastically declined to less than $1 million in 2019. This downward trend continued into 2020 with a marginally negative figure, followed by a substantial negative reported net income of about $60 million in 2021. However, in 2022, the company reversed this trend and recorded a strong positive net income of approximately $147.1 million.

The adjusted net income figures closely mirror the reported income throughout the entire timeframe, suggesting that the adjustments made had minimal effect on the reported profitability metrics. The differences between reported and adjusted figures are marginal across all years.

Examining profitability as a percentage of sales via the net profit margin, the reported margins decline sharply from a healthy 6.95% in 2018 to a negligible 0.17% in 2019, followed by negative margins of -0.25% and -6.95% in 2020 and 2021, respectively. This indicates the company was operating at a loss relative to revenues during those years. In 2022, net profit margin significantly improved, reaching 12.37%, reflecting a notable turnaround in operational efficiency or revenue quality.

The adjusted net profit margin follows the same trend and values as the reported margin, reinforcing the conclusion that adjustments made to net income did not materially alter the profitability outlook during these periods.

Overall, the data reveal a period of financial instability and losses in the middle years, followed by a strong recovery in 2022 both in absolute net income and net profitability. This suggests the company may have undertaken strategic, operational, or market-driven changes leading to significant improvement in financial performance by the last reported year.

Key Observations:

- Initial strong profitability in 2018 was followed by a steep decline to near breakeven and losses over the next three years.

- Both reported and adjusted net incomes and margins follow highly similar trends and values annually.

- A reversal to high positive net income and margins in 2022 marks a distinct recovery phase.

The financial data reveals significant fluctuations over the observed five-year period. The reported net income initially experienced a sharp decline from approximately $29.2 million in 2018 down to just under $1 million in 2019, followed by a slight loss in 2020. This downward trend intensified markedly in 2021 with a substantial loss of around $60 million. However, this negative trajectory reversed dramatically in 2022, concluding with a strong positive net income near $147 million.

The adjusted net income values closely mirror the reported figures, indicating minimal divergence between the reported and investment-adjusted results. This consistency suggests that the adjustments made for investment considerations did not materially impact the overall net income trend.

Regarding profitability, the reported Return on Equity (ROE) reflects a similar pattern to net income. It started at a moderate 6.25% in 2018 but plummeted to near zero in 2019 and entered negative territory in both 2020 and 2021. The lowest point was found in 2021 at -5.73%, reflecting operating challenges or adverse financial conditions during that year. A pronounced recovery is evident in 2022, with ROE climbing to a strong 11.6%, suggesting improved efficiency in generating returns from shareholders' equity.

The adjusted ROE closely tracks the reported ROE, with negligible deviations each year, reinforcing the notion that investment adjustments had limited effect on this profitability metric.

Overall, the trend indicates a period of financial difficulty between 2019 and 2021, characterized by diminishing income and returns. This was followed by a marked turnaround in 2022, achieving significant profitability and improved equity returns. The parallel movement of reported and adjusted figures throughout the period suggests the company’s core operational performance was the primary driver of financial results rather than changes in investment accounting or adjustments.

Reported Net Income

Declined sharply after 2018, turning negative in 2020 and 2021, before recovering strongly in 2022.

Adjusted Net Income

Closely aligned with reported net income, indicating minimal impact from investment adjustments.

Reported ROE

Followed a similar downward then upward trend as net income, shifting from positive to negative and back to a strong positive in 2022.

Adjusted ROE

Mirrored reported ROE trends with slight variations, confirming consistency between reported and adjusted profitability measures.

The reported and adjusted net income figures for the company reveal considerable volatility across the observed periods. Initially, net income was positive and fairly substantial in 2018, but it sharply decreased in 2019, nearing breakeven levels. The trend worsened in 2020 with negative net income, which deepened considerably in 2021, reflecting significant financial challenges. However, this trend reversed dramatically by 2022, where net income surged to a high positive value, indicating a strong recovery or a significant one-off gain.

The adjusted net income follows an almost identical pattern to the reported net income, with only minor differences in the figures for 2021 and 2022. This suggests that adjustments made for investment-related items or other atypical factors had limited impact on the overall profitability trends during these years.

Return on assets (ROA) corresponds closely to the net income trends. The reported ROA starts at a reasonable 4.06% in 2018, declines sharply to near zero in 2019, turns slightly negative in 2020, and drops further in 2021, consistent with the loss positions. By 2022, ROA improves substantially to 5.16%, indicating a return to profitability and efficient utilization of assets.

The adjusted ROA figures mirror the reported figures almost perfectly, again emphasizing the minimal difference that adjustments had on asset profitability. The close alignment of reported and adjusted ROA suggests that asset base valuation or investment adjustments had little effect on the company’s return metrics.

Summary of Key Trends

The company experienced a period of declining and negative profitability from 2019 through 2021, with net income and ROA reaching their lowest points in 2021. This may indicate operational challenges, increased costs, or other adverse business conditions during this timeframe.

The strong recovery in 2022, with net income and ROA exceeding prior high points, highlights a significant positive change, possibly due to improved operations, favorable market conditions, or non-recurring gains.

The negligible differences between reported and adjusted values over these years suggest that investment-related adjustments did not materially influence profitability or asset returns.