Taser Records Solid Top-Line Results, Though Margins Appear Arrested

TASER International, Inc. TASR reported strong revenue results, but delivered a weak margin performance due to high opex [operating expenses].

Although TASER’s video business is “rapidly achieving scale,” there are concerns around intensifying competition, Ladenburg Thalmann’s Glenn Mattson said in a report. He maintained a Neutral rating.

Opex Outpaces Revenue Growth

The company reported revenue at $82 million, ahead of Ladenburg Thalmann’s Street high forecast of $74.1 million. While weapons revenue was up 25 percent year over year, video revenue grew 152 percent.

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Gross margins came in at 60.6 percent, lower than Ladenburg Thalmann’s estimate of 65.8 percent, with video hardware margins being at about breakeven and weapons gross margins of 69.3 percent missing the estimate of 71.5 percent. Opex was recorded at $40.3 million, higher than the forecast of $35.8 million.

Take On Video Business

The company’s full-year video revenue grew to $65.6 million, from $35.5 million a year earlier.

“Video Service is on pace to overtake video hardware revenue by our model in 3Q:17 a significant milestone,” Mattson wrote. He added, however, that operating losses of this segment could expand in 2017, with the company “spending aggressively” in sales and R&D.

Expressing concern regarding increased competition, the analyst stated that there could be pricing pressure with “multiple entrants now winning customers.”