Aerovironment 2026 Q2 Earnings Net Loss Widens 326.7% Despite Record Revenue Surge

Aerovironment (AVAV) reported a 150.7% revenue surge to $472.51 million in Q2 2026, exceeding expectations, but earnings missed estimates as the company swung to a $0.34 loss per share. The firm raised full-year revenue guidance to $1.95–$2.00 billion but reduced adjusted EPS forecasts.

Revenue

Aerovironment’s total revenue surged 150.7% year-over-year to $472.51 million in Q2 2026, driven by robust demand for unmanned systems. Product sales led the growth with $325.04 million, reflecting strong performance in tactical missile systems and drone solutions, while contract services added $147.47 million, supported by expanded government contracts and BlueHalo integration.

Earnings/Net Income

The company swung to a net loss of $17.10 million ($0.34 per share) in Q2 2026, a 326.7% deterioration from $7.54 million ($0.27 per share) in the prior-year period. Margin pressures from the U.S. government shutdown, unfavorable product mix, and acquisition-related costs contributed to the sharp decline in profitability. The sharp decline in profitability highlights challenges despite robust revenue growth.

Post-Earnings Price Action Review

A strategy of buying AVAV when revenues miss and holding for 30 days delivered a 160.66% return, outperforming the benchmark by 73.97%. The approach achieved a CAGR of 21.25% with a maximum drawdown of 0.00%, underscoring its risk-averse nature. However, post-earnings volatility saw AVAV’s stock plummet 25.60% month-to-date, reflecting investor concerns over margin compression and delayed government funding.

CEO Commentary

Wahid Nawabi emphasized record Q2 bookings of $1.4 billion and $473 million in revenue, driven by $3.5 billion in new contracts. He highlighted strategic investments in R&D and manufacturing, including Salt Lake City’s Switchblade facility, to scale operations. Nawabi expressed confidence in leveraging BlueHalo integration to lead in next-gen defense tech, aligning with the DoD’s shift toward agile solutions.

Guidance

AeroVironment raised FY2026 revenue guidance to $1.95–$2.00 billion, citing 93% visibility to the midpoint. Adjusted EBITDA remains targeted at $300–$320 million, with non-GAAP EPS of $3.40–$3.55. Kevin McDonnell noted 70% of Q4 EBITDA is expected in the fourth quarter due to delayed government funding, while Nawabi emphasized margin expansion and manufacturing execution.

Additional News

1. Canaccord Genuity

   lowered AVAV’s price target to $400 from $430, citing margin pressures, while Cantor Fitzgerald reduced its target to $315 from $335, maintaining an Overweight rating.

2. The company secured an $874 million IDIQ contract from the U.S. Army for foreign military sales of UAS and C-UAS systems, expanding its defense portfolio.

3. CEO Wahid Nawabi reiterated strategic investments in R&D and Salt Lake City’s manufacturing hub to meet accelerated demand, despite challenges from the U.S. government shutdown.