AeroVironment's Q3 2025: Navigating Contradictions in Demand, Production, and External Pressures

These are the key contradictions discussed in AeroVironment's latest 2025 Q3 earnings call, specifically including: Ukraine funding and demand growth, international Switchblade sales and negotiations, work stoppage impacts on revenue expectations, LMS production capacity, growth expectations in LMS segment, and the impact of wildfires on operations:



Record Backlog and Orders:
- AeroVironment reported a record backlog of $764 million, with Loitering Munitions Systems (LMS) securing over $350 million in Switchblade contracts, the single largest order in the company's history.
- The growth was driven by strong global demand and expansion of manufacturing capacity.

Impact of Operational Challenges:
- Third quarter financial performance was affected by unprecedented LA windstorms, resulting in extended power outages and forced shutdowns that impacted manufacturing and supply chain logistics.
- These disruptions partially constrained the ability to achieve operational goals, impacting quarterly results.

Slowdown in Ukraine Revenue:
- Ukrainian revenue decreased to 5% of the company's total revenue in Q3, compared to 38% of revenue the previous fiscal year.
- This decline is due to the proactive pivot away from reliance on Ukrainian demand and a focus on long-term growth opportunities.

BlueHalo Acquisition and Market Expansion:
- The acquisition of BlueHalo is expected to increase the company's total market opportunity, adding space, counter UAS, directed energy, electronic warfare, and cyber solutions to its portfolio.
- This acquisition aligns with the US DoD's priorities and is expected to enhance market leadership by delivering comprehensive solutions across air, land, sea, space, and cyber domains.