Aerovironment 2026 Q2 Earnings Net Income Deteriorates 326.7%

Aerovironment (AVAV) reported fiscal 2026 Q2 results marked by record revenue growth but a significant earnings decline. While revenue surged 150.7% year-over-year, the company swung to a net loss of $17.10 million, missing expectations. Management raised full-year revenue guidance to $1.95–$2B but reduced profit forecasts, reflecting margin pressures and operational challenges.

Revenue

Aerovironment’s total revenue soared to $472.51 million in Q2 2026, a 150.7% increase from $188.46 million in the prior-year period. Product sales accounted for $325.04 million, driven by strong demand for unmanned systems, while contract services revenue reached $147.47 million. The BlueHalo acquisition contributed $245.1 million to the top line, with legacy product sales growing 21% to $227.4 million.

Earnings/Net Income

The company reported a net loss of $17.10 million, or $0.34 per share, compared to a profit of $7.54 million, or $0.27 per share, in Q2 2025. The earnings shortfall was attributed to a 4,361-basis-point decline in gross margin to 22%, driven by unfavorable product mix, the U.S. government shutdown, and integration costs from the BlueHalo merger. Despite robust revenue, the net income deterioration of 326.7% highlights ongoing profitability challenges.

Post-Earnings Price Action Review

The strategy of buying AVAV when revenues miss and holding for 30 days delivered strong results, with a 160.66% return, significantly outperforming the benchmark return of 86.69%. The strategy’s excess return of 73.97% and a CAGR of 21.25% underscore its growth potential. However, it had a maximum drawdown of 0.00%, indicating a risk-averse approach as it avoided losses during the backtest period.

CEO Commentary

Wahid Nawabi, CEO, emphasized record Q2 results despite the U.S. government shutdown, including $3.5B in contract awards and $1.4B in bookings. Strategic investments in R&D and capacity expansion, including a new Salt Lake City facility, are positioned to drive long-term growth. Nawabi expressed confidence in AV’s leadership in defense tech, citing the integration of BlueHalo and innovation in products like the P-550.

Guidance

AeroVironment raised FY2026 revenue guidance to $1.95B–$2B, with adjusted EBITDA of $300M–$320M and non-GAAP adjusted EPS of $3.40–$3.55. Kevin McDonnell noted 93% visibility to the midpoint of revenue guidance, driven by $3.5B in contract awards. Q4 is expected to account for 70% of annual EBITDA, with gross margins projected to reach the high 30s%.

Additional News

AeroVironment’s recent acquisition of BlueHalo significantly boosted its Q2 revenue, contributing $245.1 million. The company secured an $874.26 million contract from the U.S. Army for unmanned systems and counter-UAS solutions, underscoring its strategic relevance in defense tech. Analysts at Canaccord and Cantor Fitzgerald lowered AVAV’s price targets to $400 and $315, respectively, citing margin pressures and cash flow concerns. Despite these adjustments, both firms maintained “Buy” or “Overweight” ratings, reflecting long-term confidence in AVAV’s growth trajectory.