Axon published its second-quarter report on 5 August 2026. We are writing about it today, 6 August.
What was reported
| Quarter | Change | |
|---|---|---|
| Revenue | 904 | +35% |
| of which Software and Services | 398 | +36% |
| of which Connected Devices | 507 | +35% |
| Annual recurring revenue | 1,600 | +39% |
| Net income | 29 | - |
| Non-GAAP net income | 155 | - |
| Adjusted EBITDA | 242 | - |
In millions of dollars
The number that explains the model
Net revenue retention of 126%
126% means that if Axon had not signed a single new customer, its revenue would still have grown 26%.
Existing customers increase their spend faster than others leave.
And that is what explains annual recurring revenue: $1.6 billion, up 39% - a faster rate than the 35% total growth.
Meaning the contracted part of the business is growing faster than the one-off part. In a company that began as a maker of tasers and body cameras, that is a reversal of the model.
And what is growing fastest
- AI Era revenue grew nearly 700%
- Platform Solutions: $150 million, up 123%
- Dedrone - the counter-drone business - surpassed $100 million
Dedrone is the detail worth noting. It is an acquisition that has become a business of hundreds of millions, in a field that has turned critical over the last two years.
And the line we have already seen twice this week
Tariff refunds again
Operating income rose $48 million, to $47 million.
And the explanation in the company's words: the increase was "driven by higher revenue and global tariff refunds", partially offset by increased investment to drive future growth.
And this is the third company this week where tariff refunds affect the profit line:
- Caterpillar - $392 million of IEEPA refunds inside operating profit, roughly 1.9 percentage points of margin
- SolarEdge - only when including $11.5 million of refunds does the guidance midpoint imply an operating profit
- And Axon - global tariff refunds as one of two explanations for the jump in operating income
Three companies, three entirely different industries - heavy equipment, solar energy and public safety - in the same week.
That is no longer coincidence. And it is a line that will disappear.
The company does not state the amount of the refund - unlike Caterpillar and SolarEdge - so it is not possible to quantify how much of the $48 million came from it.
The guidance
Axon raised its full-year revenue growth outlook to 32% to 34%, and held its adjusted EBITDA margin outlook at 25.5%.
My Angle
A personal opinion of Ilan Abramov - not advice, not a recommendation
What impresses me most about Axon is not the growth but its quality.
Net revenue retention of 126% is a figure most software companies would be delighted with - and here it appears at a company that also sells hardware. It means the customer buys a device once and then keeps paying for the software around it, increasing that payment over time.
And recurring revenue growing 39% against total growth of 35% says the mix keeps improving. That is exactly the right direction.
And what I flag: the tariff refunds. This is the third company this week - after Caterpillar and SolarEdge - where tariff refunds enter the profit line. And at Axon, unlike the other two, there is no number. The company cites them as an explanation without quantifying them.
And that makes analysis harder. When operating income rises $48 million and one of two explanations is a one-off item of unknown size, you cannot tell how much of the improvement is operational. I would ask for the number on the call.
