Aerovironment 2026 Q2 Earnings Earnings Plunge 326.7% Despite Record Revenue

Aerovironment’s Q2 2026 earnings report revealed a stark contrast between record revenue and a significant net loss. While revenue surged 150.7% year-over-year to $472.51 million, the company swung to a loss of $0.34 per share, missing estimates and marking a 326.7% deterioration in net income. Guidance for FY2026 was raised to $1.95–$2 billion, reflecting strong demand for defense technologies.

Revenue

Aerovironment’s total revenue soared to $472.51 million, driven by robust performance in both product sales and contract services. Product sales accounted for $325.04 million, reflecting a 151% year-over-year increase, while contract services revenue reached $147.47 million, up 296.1% from the prior year. The BlueHalo acquisition, completed in May 2025, contributed significantly to the top-line growth, with product and service revenues from the acquisition reaching $134.4 million and $110.7 million, respectively. Autonomous Systems and Space, Cyber & Directed Energy segments reported $301.6 million and $170.9 million in revenue, underscoring the company’s diversified defense portfolio.

Earnings/Net Income

The company reported a net loss of $17.10 million, or $0.34 per share, a dramatic shift from a $7.54 million profit a year earlier. This 326.7% decline in profitability was attributed to a 4,361-basis-point drop in gross margin to 22%, driven by one-time costs, unfavorable product mix, and operational challenges during the U.S. government shutdown. The earnings miss and margin pressure left investors with a clear takeaway: while revenue momentum is strong, near-term profitability remains a critical concern.

Post-Earnings Price Action Review

A strategy of buying AVAV when revenues miss and holding for 30 days historically delivered a 160.66% return, outperforming the benchmark by 73.97%. The approach’s 21.25% CAGR highlights its growth potential, though its 0.00% maximum drawdown suggests a risk-averse profile.

CEO Commentary

CEO Wahid Nawabi emphasized resilience amid the government shutdown, citing $3.5 billion in contract awards and $1.4 billion in bookings. He highlighted strategic investments in R&D and manufacturing, including a new Salt Lake City facility targeting $2 billion annual capacity for Switchblade and P-550 systems. Nawabi expressed confidence in meeting demand despite near-term challenges, aligning with the DoD’s shift toward agile commercial solutions.

Guidance

Aerovironment raised FY2026 revenue guidance to $1.95–$2 billion, with 93% visibility to the midpoint driven by $3.5 billion in awards. Adjusted EBITDA guidance of $300–$320 million remains unchanged, with 70% expected in Q4 due to margin improvements. Non-GAAP EPS is projected at $3.40–$3.55, supported by $669 million in cash and $1.1 billion in funded backlog.

Additional News

Recent developments include Canaccord Genuity lowering its price target to $400 and Cantor Fitzgerald cutting its target to $315, both citing margin pressures and free cash flow challenges. The BlueHalo acquisition, which contributed $245.1 million in Q2 revenue, has become a focal point for growth, though integration costs and operational transitions remain hurdles. Meanwhile, a $874 million U.S. Army contract for unmanned systems and counter-UAS solutions underscores Aerovironment’s strategic positioning in defense innovation.