Executive Summary

Record quarter: Revenue $275.1M (+40% YoY), non-GAAP EPS $1.61, adjusted EBITDA $61.6M; GAAP EPS $0.59, with a non-cash $18.4M UGV goodwill impairment impacting GAAP results .
Broad-based strength: LMS revenue +87% YoY to $138.3M; UxS +9% to $112.6M; MW +24% to $24.1M. Full-year bookings hit $1.2B; funded backlog $726.6M (+82% YoY) .
FY26 outlook (post BlueHalo close May 1): revenue $1.9–$2.0B, adjusted EBITDA $300–$320M, non-GAAP EPS $2.80–$3.00; adjusted GM 29–31%; R&D 6–7% of revenue; CapEx 6–8% .
Estimate beats: Revenue beat by ~$33.5M, non-GAAP EPS beat by ~$0.22 versus S&P consensus; narrative catalysts include robust LMS demand, international exposure (52% of revenue), and increased FY26 scale/visibility (~70% at guidance midpoint) .
Strategic catalyst: BlueHalo acquisition completion creating two-reportable segments (Autonomous Systems; Space, Cyber & Directed Energy), expanding TAM in counter-UAS, directed energy, space communications, and cyber .

What Went Well and What Went Wrong

What Went Well

LMS momentum: Q4 LMS revenue $138.3M (+87% YoY), with ~80% from Switchblade 600; eight countries placed initial orders in FY25 and additional eight in FMS process, underscoring strong international traction .
Bookings and backlog: Record $1.2B FY25 bookings; funded backlog $726.6M (+82% YoY), providing solid visibility into FY26 .
Guidance scale-up with visibility: FY26 revenue $1.9–$2.0B, adj. EBITDA $300–$320M; management cited ~70% revenue visibility at midpoint, trending margins higher through the year .

What Went Wrong

UGV impairment: Non-cash goodwill impairment of $18.4M due to lower forecast in UGV business; also $4.6M accelerated intangible amortization hit Q4 gross margin (36% vs 38% LY) .
Working capital build: Unbilled receivables increased by ~$60M in Q4 amid Switchblade in-process volumes and contract definitizations, pressuring near-term cash conversion .
Prior-quarter softness: Q3 revenue $167.6M (-10% YoY) and GAAP net loss (-$1.8M) amid Southern California wind/fire disruptions; sequential recovery in Q4 was strong but highlights operational sensitivity .

Financial Results

Quarterly Performance vs Prior Periods and Estimates

Metric	Q4 FY24 (oldest)	Q2 FY25	Q3 FY25	Q4 FY25 (newest)
Revenue ($USD Millions)	$196.98	$188.46	$167.64	$275.05
GAAP Gross Margin ($USD Millions)	$75.63	$73.64	$63.20	$100.33
GAAP Gross Margin %	38%	39%	38%	36%
GAAP Diluted EPS ($)	$0.22	$0.27	($0.06)	$0.59
Non-GAAP Diluted EPS ($)	$0.43	$0.47	$0.30	$1.61
Adjusted EBITDA ($USD Millions)	$22.2	$25.9	$21.8	$61.6

Estimates vs Actuals (Q4 FY25):

Revenue: Consensus $241.59M* vs Actual $275.05M → Beat by ~$33.46M* [Values retrieved from S&P Global].
EPS (Primary, non-GAAP): Consensus $1.391* vs Actual $1.61 → Beat by ~$0.22* [Values retrieved from S&P Global].

Metric	Q4 FY25 Consensus	Q4 FY25 Actual
Revenue ($USD Millions)	241.59*	275.05
Primary EPS ($)	1.391*	1.61

Segment Breakdown (Q4)

Segment	Q4 FY24 Revenue ($M)	Q4 FY25 Revenue ($M)
UxS	$103.74	$112.64
LMS	$73.76	$138.35
MW	$19.48	$24.07
Total	$196.98	$275.05

KPIs and Mix

KPI/Metric	Q3 FY25	Q4 FY25
Funded Backlog ($M)	$763.5	$726.6
FY Bookings ($B)	—	$1.2
International Revenue Share	—	52%
Non-Ukraine Europe Share	—	~24% (of company revenue)
Ukraine Revenue Share	—	12% of Q4; 18% FY25

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY26	—	$1.9–$2.0B	New
Adjusted EBITDA	FY26	—	$300–$320M	New
Non-GAAP Diluted EPS	FY26	—	$2.80–$3.00	New
Adjusted Gross Margin %	FY26	—	29%–31%	New
R&D (% of Revenue)	FY26	—	6%–7%	New
SG&A (% of Revenue)	FY26	—	11%–13% (excl. intangible amort. & deal costs)	New
CapEx (% of Revenue)	FY26	5% (FY25 result)	6%–8% (incl. cloud implementation)	Raised vs FY25 actual
Revenue Phasing	FY26	—	H1 45% / H2 55%	New
Visibility	FY26	—	~70% at midpoint	New

Note: Company cannot reconcile FY26 non-GAAP EPS to GAAP due to BlueHalo intangible valuation not yet complete .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY25, Q3 FY25)	Current Period (Q4 FY25)	Trend
AI/autonomy & new products	Announced BlueHalo deal; strong LMS growth; launched P550; MW up; UxS down	Highlighted P550 (Group 2 AI UAS), Jump 20X (VTOL MUAS), Red Dragon (autonomous OWA UAS); integration with Avacor and SpotterEdge	Expanding portfolio; sharper autonomy focus
Supply chain/operations	Q3 disruptions (winds/fires); revenue down; plan for Utah facility to double Switchblade capacity	Record in-process Switchblade volumes; unbilled receivables up due to definitizations; expect working capital improvement early FY26	Scaling; WC headwinds near term
Tariffs/macro & defense spend	—	Noted potential NATO 5% GDP pledge tailwind; strong international demand and trust in AV systems	Macro tailwinds strengthening
Product performance	Q2–Q3 LMS strong; backlog building; Q3 IDIQ orders; Utah capacity expansion	LMS +87% YoY; SB600 ~80% of LMS; Jump 20 ~$100M Q4 orders; eight countries ordered Switchblade	LMS accelerating
Regional mix	—	International 52% of revenue; ~24% from non-Ukraine Europe; Ukraine 12% of Q4, 18% FY	Diversifying beyond Ukraine
Regulatory/legal	Q3: BlueHalo deal costs pressured SG&A; stop-work orders affected ~$13M backlog	$2.1M legal accrual; UGV goodwill impairment $18.4M; PEO Soldier contracting shift clarified for backlog	One-offs; contracting transition
R&D execution	Q2: R&D up YoY; Q3: R&D spend 12–13% guide	Q4 R&D down YoY due to prior half-flight tests; FY25 R&D ~12% of revenue; FY26 guide 6–7%	Efficiency gains post major test cycle

Management Commentary

“AeroVironment finished out fiscal year 2025 with a remarkable fourth quarter, which included record revenue, significantly higher profits and a robust backlog nearly double that from fiscal year 2024.” — Wahid Nawabi .
“We closed our acquisition of BlueHalo… establishing AV as a premier defense tech prime… we are setting our fiscal year 2026 revenue guidance between $1.9 billion and $2.0 billion.” — Wahid Nawabi .
“Adjusted gross margins… 29%–31%… EBITDA percentage trending 10%–12% in Q1 to high teens by Q4 as we realize synergies and a higher product mix.” — Kevin McDonnell .
“International customers represented 52% of company revenues… Ukraine revenues were 12% in the quarter and 18% for the year; we expect Ukraine to be <5% in FY26.” — Kevin McDonnell .

Q&A Highlights

Army transformation and drone demand: Management expects incremental opportunities across loitering munitions, counter-UAS, directed energy, and EW; AV can deliver at scale with battle-proven systems .
Backlog mechanics: Decline in total backlog driven by unfunded-to-funded conversions and revenue burn; contracting migrated to PEO Soldier; JUONS contract expired and replaced with IDIQ path .
FY26 guidance ranges and visibility: ~~70% visibility; cost synergies targeted (~~$10M in year one), revenue synergies to come over time .
CapEx: Elevated in FY26 (6–8%) to scale capacity in space communications, directed energy, counter-UAS, loitering munitions, and unmanned systems .
International defense spend: Potential NATO 5% GDP pledge seen as a multi-year tailwind; AV is uniquely positioned due to trust and ability to deliver quickly .

Estimates Context

Q4 FY25 revenue beat: $275.05M actual vs $241.59M consensus* → +13.8% vs estimates*.
Q4 FY25 non-GAAP EPS beat: $1.61 actual vs $1.391 consensus* → +$0.22 vs estimates*.
Values retrieved from S&P Global.
Actuals per company filings: revenue and non-GAAP EPS in tables above .

Key Takeaways for Investors

Strong execution into BlueHalo close: Q4 momentum and $1.2B bookings set a high base; FY26 guidance implies ~15% growth vs pro forma FY25, with margin expansion as the year progresses .
LMS as growth engine: Switchblade 600 mix and multi-country adoption support continued outperformance; expanded Utah capacity adds resilience and scale .
Mix shift and working capital: Higher product mix and contract definitizations boost revenue but temporarily elevate unbilled receivables; management expects early FY26 improvement .
One-time GAAP headwinds: UGV impairment and accelerated amortization depressed GAAP margins/EPS; non-GAAP results better reflect operating trajectory .
International diversification: 52% international revenue and growing European demand reduces reliance on Ukraine (guided to <5% in FY26) .
Segment realignment creates new TAM: Space, Cyber & Directed Energy adds exposure to directed energy, laser comms, cyber/mission services; expect synergies and broader DoD alignment .
Trading setup: Estimate beats and FY26 scale/visibility are positive; watch for contract timing (DoD appropriations/definitizations), WC normalization, and quarterly margin ramp per guide .

S&P Global disclaimer: Asterisked consensus values retrieved from S&P Global.

AeroVironment Inc (AVAV)·Q4 2025 Earnings Summary