AeroVironment Q1 Record Revenue And Backlog

AeroVironment reported record first-quarter fiscal 2027 revenue of $480 million, driven by strong demand for uncrewed systems and counter-drone technologies. According to data from GN markets/earnings (en-US), the company’s funded backlog reached a historic high of $1.5 billion, marking a 37% increase from the same period last year. Adjusted earnings per share surged 84% year over year to $0.59, reflecting improved operational efficiency despite significant investment in new production facilities.

The performance was underpinned by $683 million in new bookings, resulting in a book-to-bill ratio of 1.4. Chief Executive Officer Wahid Nawabi highlighted the expansion of the counter-UAS portfolio, including a nearly $465 million Army contract for the LOCUST laser system. While the company reaffirmed its full-year revenue guidance of $2.125 billion to $2.225 billion, it expects negative free cash flow due to heavy capital expenditures for capacity expansion.

Segment Revenue Driven By Autonomous Systems

The Autonomous Systems segment generated $346 million in revenue, accounting for 72% of total sales and rising 21% year over year. Within this segment, Precision Strike and Defensive Systems revenue increased 8% to $197 million, supported by loitering munitions and Titan counter-UAS products. Uncrewed Aircraft Systems revenue grew 71% to $120 million, led by domestic and international sales of the P550, JUMP 20-X, and Puma platforms.

In contrast, the Space, Cyber, and Directed Energy segment saw revenue decline 21% to $134 million. Chief Financial Officer Sean Woodward attributed this drop to the termination of the SCAR contract in March and other discontinued government programs. SCAR-related revenue had contributed $32 million to the prior-year quarter, meaning the loss of this contract significantly impacted segment performance despite stable demand in other areas.

Counter-UAS Contracts Expand Market Share

AeroVironment secured a nearly $465 million U.S. Army Enduring High Energy Laser contract for its LOCUST directed-energy system. Nawabi described this as the first production contract for directed-energy systems in U.S. military history. The company also announced its first international direct commercial sale for LOCUST, signaling a broader market adoption of its drone-defense technologies.

Additionally, AeroVironment received a $500 million Titan counter-UAS IDIQ award, further solidifying its position in the drone-defense market. These awards support the company’s expansion in directed energy and drone-defense technologies, contributing to the record backlog. The total funded and unfunded backlog stood at approximately $2.8 billion at quarter-end, excluding remaining capacity on certain sole-source IDIQ contracts.

Investment Costs Impact Cash Flow

Adjusted gross margin improved to 30% from 29% a year earlier, with adjusted product gross margin rising to 40% from 36%. However, adjusted service gross margin declined to 8% from 13%, due to revenue losses from discontinued programs and award delays in the Cyber and Mission Solutions business. Adjusted EBITDA was $53 million, or 11% of revenue.

Despite strong earnings, AeroVironment generated only $13 million in operating cash flow, resulting in negative free cash flow of $36 million. This was driven by higher capital spending for facility expansions. The company maintains its fiscal 2027 revenue guidance of $2.125 billion to $2.225 billion, acknowledging that investment costs will continue to pressure cash flow in the near term.