AeroVironment, Inc. (AVAV) Earnings & Analysis

Latest quarter

AeroVironment reported Q1 FY2027 revenue of $480.5 million, above the consensus estimate of $467.9 million and up from $454.7 million a year earlier. Diluted EPS was −$0.10, compared with −$1.44 in the prior-year quarter.

The filing attributed the revenue increase to higher product and service sales. Demand for uncrewed aircraft systems and customer-funded research helped the Autonomous Systems segment grow, while the Space, Cyber and Directed Energy segment’s revenue fell. The filing said the latter decline reflected the prior-year termination of the SCAR program and reduced scope on certain Cyber and Mission Solutions contracts. It also cited Switchblade order delays as an offset to growth in Autonomous Systems.

AeroVironment reported gross margin of 25.9%, up from 20.9% a year earlier; the filing attributed the improvement primarily to lower amortization and other non-cash purchase accounting expenses. Free cash flow was −$36.0 million, compared with −$155.8 million a year earlier. CFO Sean Woodward said capital investment in production facilities contributed to the quarter’s cash outflow.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Wahid Nawabi said contract wins across AeroVironment’s portfolio added to its bookings pipeline, while CFO Sean Woodward reported $1.5 billion in funded backlog at quarter-end. Woodward said total funded and unfunded backlog was approximately $2.8 billion and that unfunded backlog excludes ceiling values on sole-source contracts.

Nawabi highlighted the Army’s LOCUST laser award and an international order as signs of demand for the counter-drone system. He said AeroVironment is expanding its Albuquerque facility for LOCUST production and its Huntsville site for Freedom Eagle-1 interceptors. He also said a Southern California investment would consolidate operations and add production capacity, while the Salt Lake City facility would expand loitering-munitions manufacturing.

Asked about the pace of LOCUST adoption, Nawabi said the supplier base was still developing: “the supply chain and the suppliers that provide systems, subsystems for this is quite young.” He said AeroVironment was adding suppliers but that long-lead components take time to secure. On competition, he said the company’s P550 was being delivered under the Army’s reconnaissance program and that customer experience could influence future awards.

On margins, Nawabi told analysts that higher LOCUST volumes and a transition toward firm fixed-price contracts should improve the Space, Cyber and Directed Energy segment’s profitability. Woodward said discontinued Cyber and Mission Solutions programs, other program losses and award delays had made fixed costs harder to absorb.

Asked about the government budget, Nawabi said approval timing remained uncertain but that the company did not expect it to affect its current guidance. Woodward said revenue and adjusted EBITDA were expected to be weighted toward the second half, reflecting sales mix and volume. Nawabi also said he expected international demand to contribute more to Switchblade growth in the second half and beyond.

Guidance

AeroVironment reaffirmed its fiscal year 2027 outlook on the call. Woodward said recent counter-UAS awards, including Titan and LOCUST, were already incorporated into that outlook; Nawabi said the company would continue to monitor the timing of congressional budget approval.