Sign in
AI

AeroVironment Inc (AVAV)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 FY26 revenue was $454.7M, up 140% YoY, driven by BlueHalo contribution ($235.2M) and broad strength across Autonomous Systems and Space/Cyber/Directed Energy; revenue beat S&P consensus ($436.9M*) while EPS of $0.32 non-GAAP missed the $0.343* consensus due to large non-cash amortization and acquisition-related costs .
  • GAAP diluted EPS was $(1.44) vs $0.75 prior-year; gross margin compressed to 21% given a higher services mix and $37.4M of intangible amortization; non-GAAP adjusted EBITDA was $56.6M .
  • Backlog and visibility strengthened: funded backlog reached $1.1B and bookings were $399.0M; management cited 82% visibility to FY26 revenue midpoint and maintained FY26 revenue and adjusted EBITDA guidance, while raising non-GAAP EPS to $3.60–$3.70 .
  • Catalysts highlighted: $240M space laser communications award (moving to on-orbit delivery), expanding directed energy LOCAST deliveries, and anticipated sizable Q2 contract signings approaching $1–$2B, plus near-term LRR down-select decision for P550 UAS .

What Went Well and What Went Wrong

What Went Well

  • Record Q1 revenue of $454.7M, with AxS at $285.3M and SCDE at $169.4M; BlueHalo added $235.2M total, broadening portfolio and scaling capacity .
  • Strength in bookings/backlog and visibility: funded backlog $1.1B, Q1 bookings $399.0M, and 82% visibility to FY26 midpoint; management maintained FY26 revenue $1.9–$2.0B and adjusted EBITDA $300–$320M .
  • Strategic wins: $240M laser communications terminals award transitioning to production and LOCAST laser systems deliveries; CEO emphasized AV’s leadership and ability to scale manufacturing rapidly .

What Went Wrong

  • Profitability pressure: GAAP gross margin fell to 21% (from 43% prior-year) due to services mix shift and $37.4M intangible amortization; GAAP EPS $(1.44) vs $0.75, reflecting $79.7M non-cash amortization and purchase accounting expenses, plus $23.7M deal/integration costs .
  • Higher interest expense and operating costs: other loss rose to $15.1M (debt from BlueHalo acquisition refinanced), SG&A increased to $131.3M including amortization and integration costs; adjusted SG&A $65.2M still elevated during integration .
  • Working capital/invoicing friction: unbilled receivables up with overtime revenue recognition (41% → 75% YoY), impacted by contracting officer transitions; management expects improvement next quarter .

Financial Results

MetricQ3 FY25Q4 FY25Q1 FY26
Revenue ($USD Millions)$167.636 $275.050 $454.676
GAAP Gross Margin ($USD Millions)$63.199 $100.332 $95.118
GAAP Diluted EPS ($USD)$(0.06) $0.59 $(1.44)
Non-GAAP EPS (diluted) ($USD)$0.30 $1.61 $0.32
Non-GAAP Adjusted EBITDA ($USD Millions)$21.8 $61.6 $56.6
Funded Backlog ($USD Billions)$0.764 $0.727 $1.100
Q1 FY26 vs S&P ConsensusConsensus*ActualCommentary
Revenue ($USD Millions)436.939*454.676 Beat on revenue (mix strength, BlueHalo)
EPS (Primary, diluted) ($USD)0.343*0.32 Slight miss (amortization, integration costs)
EBITDA ($USD Millions)54.713*20.951*Below consensus (definition differences vs non-GAAP adj EBITDA 56.6)

Values retrieved from S&P Global*

Segment Breakdown (Q1 FY26):

SegmentRevenue ($USD Millions)Segment Adjusted EBITDA ($USD Thousands)
Autonomous Systems (AxS)$285.324 $52,760
Space, Cyber & Directed Energy (SCDE)$169.352 $3,796
Total$454.676 $56,556

KPIs (Q1 FY26):

KPIQ1 FY26
Bookings ($USD Millions)$399.0
Funded Backlog ($USD Billions)$1.1
Visibility to FY26 midpoint (%)82%
Services mix (% of revenue)31%
GAAP Product GM %26.4%
GAAP Service GM %8.7%
Adjusted Product GM %36%
Adjusted Service GM %13%

Pro Forma Segment Revenue Trend (FY25–Q1 FY26):

Segment ($USD Millions)Q1 FY25Q2 FY25Q3 FY25Q4 FY25Q1 FY26
AxS$234.0 $261.4 $223.4 $330.6 $285.3
SCDE$150.9 $170.9 $160.0 $163.5 $169.4
Total$384.9 $432.3 $383.4 $494.1 $454.7

Note: FY25 pro forma includes BlueHalo revenue prior to acquisition .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY26$1.9–$2.0 $1.9–$2.0 Maintained
Adjusted EBITDA (Non-GAAP) ($USD Millions)FY26$300–$320 $300–$320 Maintained
Non-GAAP EPS (diluted) ($USD)FY26$2.80–$3.00 $3.60–$3.70 Raised
GAAP Loss per Diluted Share ($USD)FY26—$(1.63)–$(1.53) Introduced
Net Loss ($USD Millions)FY26—$(77)–$(72) Introduced
Adj Gross Margins (%)FY26—29%–31% New detail
IRAD (% of revenue)FY26—6%–7% New detail
SG&A (% of revenue, excl amortization/deal costs)FY26—11%–13% New detail
Stock-based comp ($USD Millions)FY26—~38 New detail

Management expects EBITDA % to trend from 10–12% in Q1 to high-teens by Q4 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 FY25)Current Period (Q1 FY26)Trend
AI/software initiativesAnnounced new Utah facility for resiliency; strategic focus on scaling core platforms . Q4 highlighted BlueHalo integration and bookings .Launched AV_Halo unified, open-standards, AI-powered platform integrating C2, vision, and targeting; open to third-party hardware/APIs .Expanding capability; platformization accelerating
Supply chain/working capitalWeather events impacted Q3 output; working capital swings .Unbilled receivables higher (overtime revenue recognition 41%→75% YoY); contracting officer alignment completed; targeted reduction next quarter .Improving execution expected
Tariffs/macro/budgetCautioned on CR risk and funding timing in Q4 outlook .Management confident AV remains priority under CR; 82% visibility to FY26 midpoint; timing of funding can shift revenue between quarters/years .Risk contained; visibility up
Product performanceQ3: record Switchblade/Jump-20 orders . Q4: LMS strength; record Q4 revenue .Switchblade 600 >200% growth; JUMP 20 ~6x; LOCAST ~5x; Titan doubled; Badger +~40% .Broad-based acceleration
Regional mixPivot away from Ukraine in FY25; built backlog .78% domestic; 22% international; Ukraine ~8% of Q1 revenue, expected 5–8% in FY26 .Domestic mix up; Ukraine steady low-single-digit share
Regulatory/legalQ3: BlueHalo deal nearing close; Q4: integration benefits and risks detailed .Integration ahead of plan; large awards expected Q2; visibility includes unfunded backlog under long-term contracts .Pipeline increasing
R&D executionQ3: IRAD supporting platforms; Q4: MW segment growth .FY26 IRAD 6–7% of revenue guidance; adj gross margin 29–31% .Scaling efficiently

Management Commentary

  • “We achieved another record first quarter with revenue of nearly $455 million… funded backlog grew to $1.1 billion… we’re maintaining our fiscal year 2026 guidance with revenue between $1.9 and $2 billion” — CEO prepared remarks .
  • On laser communications: “This contract moves our superior, next-generation long-haul laser communication terminals from the lab to orbit” — EVP Space & Directed Energy .
  • On competitive position: “There are no shortcuts… delivering at scale is a very, very high bar… we have the manufacturing capacity to produce… at urgent and very short cycles” — CEO Q&A .
  • On directed energy: “Our LOCAST laser weapon system… doesn’t require a lot of power… roughly about 15–20 kilowatts… installed on JLTV… U.S. Army is very pleased” — CEO Q&A .
  • On AV_Halo openness: “We already today enable third-party devices… open platform… third-party apps plug and play” — CEO Q&A .

Q&A Highlights

  • Guidance/visibility: Management maintained FY26 revenue ($1.9–$2.0B) and adjusted EBITDA ($300–$320M) with 82% visibility; upside depends on timing of funding/contract awards .
  • Competition/pricing: AV confident in scale/manufacturing and value proposition; sees most price pressure at low end, less in Group 2+ categories .
  • AV_Halo strategy: Hardware-agnostic, open APIs; integrates third-party systems; built for edge autonomy and MOSA interoperability .
  • Exportability and BlueHalo portfolio: International demand strong for Titan RF; LOCAST seen as leading DE counter-UAS; certification eases sales channels .
  • Golden Dome and laser comms: AV’s solutions address GEO/MEO/LEO comms; “Panther” phased array supports LEO/MEO; leadership position emphasized .
  • LRR/P550: Decision expected within 3–6 months; AV ramping manufacturing; sees P550 evolving into a global franchise .
  • Cash flow/working capital: Targeting positive cash conversion in FY26; unbilled receivables expected to decline next quarter .

Estimates Context

  • Q1 revenue beat S&P consensus ($454.7M vs $436.9M*), while EPS (non-GAAP) missed slightly ($0.32 vs $0.343*); # of estimates: revenue 12, EPS 10* .
  • S&P EBITDA consensus ($54.7M*) compares to S&P “actual” ($21.0M*) and AV’s reported non-GAAP adjusted EBITDA ($56.6M); differences reflect EBITDA definition and AV’s non-GAAP adjustments (amortization, deal costs, stock comp) .
  • Implication: Models should adjust margin/EBITDA frameworks for higher services mix and recurring intangible amortization; expect adjusted GM to trend to mid-30s by Q4 per management .

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Revenue strength with backlog/visibility: Record Q1 ($454.7M) and funded backlog ($1.1B) with 82% visibility support maintained FY26 revenue/EBITDA guidance .
  • Profitability headwinds are largely non-cash/integration related: EPS miss tied to $79.7M amortization and purchase accounting; adjusted EBITDA remains solid at $56.6M .
  • Portfolio expansion creates multi-billion TAM optionality: $240M laser comms order moving to orbit; LOCAST deliveries; Titan RF and Badger growth; AV_Halo software platformizing the stack .
  • Near-term catalysts: Potential Q2 signings approaching $1–$2B; LRR down-select; further LOCAST deliveries and laser comm production ramp .
  • Mix/GM trajectory: Services mix at 31% and adjusted GM 29% in Q1; management targets adjusted GM 29–31% for FY26 and EBITDA % improving to high-teens by Q4 .
  • Working capital normalization: Unbilled receivables expected to decline as contracting processes stabilize; supports cash conversion targets .
  • Estimate implications: Raise revenue near-term; keep FY26 topline/EBITDA intact; trim near-term EPS for amortization/integration costs; watch GM expansion into 2H .