Aerovironment 2026 Q2 Earnings Record Revenue, Sharp Earnings Decline

Aerovironment (AVAV) reported record Q2 2026 revenue of $472.51 million (+150.7% YoY) but swung to a net loss of $17.10 million (-326.7% YoY), missing both earnings and margin expectations. The company raised full-year revenue guidance to $1.95–$2.0 billion but lowered profit forecasts, citing margin pressures and operational challenges.

Revenue

Aerovironment’s total revenue surged 150.7% year-over-year to $472.51 million, driven by robust demand across its product and service offerings. Product sales led the charge, contributing $325.04 million, while contract services added $147.47 million. The performance reflects strong execution in both core unmanned systems and newly integrated BlueHalo operations, which bolstered the company’s diversified revenue streams.

Earnings/Net Income

The company’s earnings performance deteriorated sharply, with a net loss of $17.10 million in Q2 2026, a 326.7% decline from $7.54 million in the prior-year period. Earnings per share (EPS) swung to a loss of $0.34 from $0.27, marking a 225.9% negative change. The results were weighed down by a 4,361-basis-point drop in gross margin to 22%, driven by a U.S. government shutdown, unfavorable product mix, and one-time ERP implementation costs.

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 was 73.97%, and it achieved a CAGR of 21.25%, indicating robust growth potential. However, it had a maximum drawdown of 0.00%, which suggests that this strategy is risk-averse, as it did not experience any losses during the backtest period.

CEO Commentary

Wahid Nawabi, CEO of Aerovironment, highlighted record Q2 results, including $3.5 billion in contract awards and $1.4 billion in bookings, driven by strategic investments and program wins. He emphasized AV’s leadership in air, land, sea, space, and cyber domains, with a focus on AI-driven platforms and rapid manufacturing scalability. Nawabi noted challenges from the U.S. government shutdown but underscored confidence in meeting demand through expanded capacity, including a new Salt Lake City factory.

Guidance

AeroVironment raised FY2026 revenue guidance to $1.95 billion–$2.0 billion, reflecting a 15% growth over pro forma FY2025. Adjusted EBITDA is projected at $300 million–$320 million, with non-GAAP EPS of $3.40–$3.55. Kevin McDonnell noted 70% of second-half EBITDA will fall in Q4, driven by improved product mix and funded task orders post-shutdown. The company maintains full-year adjusted gross margin targets in the low 30s, with Q4 expected in the high 30s.

Additional News

Aerovironment’s recent $874 million U.S. Army contract for unmanned systems and counter-UAS solutions underscores its strategic importance in defense modernization. The company also announced a new Salt Lake City factory to address capacity constraints, signaling long-term scalability. Analysts at Canaccord and Cantor Fitzgerald cut price targets to $400 and $315, respectively, citing margin pressures, though both maintained Buy/Overweight ratings. Additionally, the BlueHalo acquisition, completed in May 2025, contributed $245.1 million in Q2 revenue, highlighting the integration’s positive impact.