AeroVironment beats earnings estimates on record drone demand
AeroVironment reported fiscal Q1 revenue of $480.5 million, beating consensus by 5.4%, driven by a 71% surge in uncrewed aircraft sales that offset declines in its space and cyber divisions.
AeroVironment delivered a fiscal first quarter that significantly exceeded market expectations, with revenue climbing 6% to a record $480.5 million. The defense contractor’s adjusted earnings per share reached $0.59, more than doubling the $0.25 consensus estimate. This performance provided a counterpoint to the stock’s 42% year-to-date decline, signaling that underlying demand for its autonomous platforms remains robust despite broader market volatility.
The financial strength was underpinned by a surge in bookings, which totaled $683 million for the quarter. This resulted in a book-to-bill ratio of 1.4, indicating that new orders outpaced recognized revenue. Consequently, the company’s funded backlog expanded 37% year-over-year to a record $1.5 billion, reflecting sustained customer appetite for its loitering munitions and reconnaissance systems.
Autonomous systems drive revenue growth
The Autonomous Systems segment was the primary growth engine, with revenue rising 21% to $346 million. Within this division, sales of uncrewed aircraft systems jumped 71% to $120 million, a sharp increase driven by military procurement for platforms like the Switchblade and Puma. Revenue from precision-strike and defensive systems also grew 8% to $197 million, showcasing a broad-based expansion in the company’s drone portfolio.
These gains masked significant weakness in the Space, Cyber, and Directed Energy segment, where revenue fell 21% to $134.5 million. Sales in the space and directed-energy categories dropped 28%, while cyber and mission-solutions revenue declined 16%. Despite this drag, gross margin improved to 26% from 21% a year earlier, aided by lower amortization expenses related to acquisition accounting.
Full-year guidance remains unchanged
AeroVironment maintained its fiscal 2027 outlook, projecting revenue between $2.125 billion and $2.225 billion. The midpoint of $2.175 billion sits slightly below the current Wall Street consensus of $2.19 billion. The company also reaffirmed its adjusted earnings per share forecast of $3.02 to $3.34, a range that remains marginally below analyst expectations.
Management noted that the financial profile remains back-end weighted, with 55% of annual revenue expected to arrive in the second half of the fiscal year. This timing suggests that the bulk of the backlog conversion and profitability realization will occur in the latter quarters, requiring sustained execution to meet the full-year targets.
