AeroVironment Soars on Record Q4, Eyes $2B Runway with BlueHalo Boost

AeroVironment (AVAV) delivered a strong fiscal Q4 report and issued mixed guidance for FY26, reflecting both robust underlying demand and the complexities of integrating its recent BlueHalo acquisition. Revenue for the April quarter rose 40% year-over-year to $275.1 million, easily beating consensus expectations of $241.5 million. Adjusted EPS of $1.61 also topped forecasts. While gross margins dipped slightly on a GAAP basis due to non-cash amortization, adjusted EBITDA of $61.6 million marked a nearly threefold increase year-over-year. Despite initially slipping to $171 on a soft EPS guide for the full year, shares rebounded and pushed above the $200 level, suggesting investor confidence in the broader growth trajectory and defense tech tailwinds.

The quarter was driven by strength in the Loitering Munition Systems (LMS) segment, where revenue surged 87% year-over-year to $138 million, fueled by demand for the Switchblade 600. That product line has become increasingly central to modern battlefield strategy, with AVAV securing $477 million in new contracts this year, including the largest deal in company history: a 5-year Army IDIQ contract valued near $1 billion. The company is expanding manufacturing capacity in Utah to support $1B+ in annual Switchblade revenue as international orders increase.

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The Uncrewed Systems (UxS) segment posted $113 million in Q4 revenue, up 9% year-over-year, with the Puma and JUMP 20 drone platforms driving sales. International orders, particularly from European allies, represented over half of JUMP 20 sales in the quarter. Management highlighted the growing adoption of Group 2 and Group 3 drones across both land and maritime applications, such as the newly introduced JUMP 20X for shipboard use.

New product development remains a key differentiator. AVAV launched three major platforms this year: the P550 (a modular AI-powered drone with 5-hour flight time), the VTOL-capable JUMP 20X, and the Red Dragon, a GPS-denied loitering munition. These offerings underscore AVAV's push to deliver autonomous, software-defined systems that align with shifting Department of Defense procurement priorities. The Red Dragon, in particular, reflects AVAV's ambitions to dominate the precision strike market in both domestic and allied forces.

Backlog and bookings both pointed to enduring strength. Total FY25 bookings hit a record $1.2 billion, with funded backlog ending the year at $726.6 million, up 82% from a year ago. The company closed its $1B+ acquisition of BlueHalo on May 1 and is now restructuring into two segments: Autonomous Systems and Space, Cyber & Directed Energy. Management noted the new structure better reflects evolving customer missions and emerging multi-domain threats.

For FY26, AeroVironment guided revenue to a range of $1.9 billion to $2 billion, consistent with internal expectations but below the Street's EPS consensus. Management expects adjusted EPS of $2.80 to $3.00, below the $3.49 estimate and well off the prior year’s $3.28. The lighter guide reflects higher integration costs, amortization, and lower Ukraine-related sales (down to 5% of revenue in FY26 vs 18% in FY25). Still, adjusted EBITDA is forecast at $300–$320 million, up more than 100% from the prior year’s $146.4 million.

Industry dynamics remain favorable. Demand for loitering munitions and tactical drones continues to rise across global defense markets, driven by real-world performance in Ukraine and an accelerated Pentagon focus on counter-UAS and electronic warfare capabilities. AVAV competes with players like Kratos and the recently public AIRO Group, but its vertically integrated production and legacy in battlefield innovation give it a distinct edge.

Technically, the stock has regained momentum after early selling, reclaiming the psychologically important $200 level. A breakout above $205 could open the door for a move toward Stifel’s $240 target, especially if investors refocus on the company’s long-term role as a defense tech prime. With a record backlog, fresh product launches, and integration of BlueHalo underway, AeroVironment is entering FY26 from a position of strength.