AeroVironment Inc. reported fiscal 2026 second‑quarter revenue of $472.5 million, a 151% year‑over‑year increase that set a new company record. Adjusted earnings per share fell to $0.44, missing the consensus estimate of $0.79 by 44% and falling short of the $0.85 estimate cited by other analysts. Gross margin contracted to 22% from 39% year‑over‑year, while the company guided for full‑year revenue of $1.95 billion to $2.0 billion, adjusted EBITDA of $300 million to $320 million, and a net loss of $38 million to $30 million.
The revenue surge was driven largely by the BlueHalo acquisition, which contributed $245.1 million to the quarter and expanded AeroVironment’s portfolio into new defense capabilities. Demand for autonomous systems and counter‑UAS solutions remained strong, with bookings reaching an all‑time high of $1.4 billion. However, the acquisition also introduced a larger share of lower‑margin service revenue, which weighed on the overall margin profile.
Margin compression was primarily caused by higher intangible amortization related to the BlueHalo purchase and the shift toward service‑based revenue, which carries lower gross margins than the company’s traditional hardware products. Integration costs associated with bringing BlueHalo’s operations into AeroVironment’s structure added further pressure, while the company’s cost‑control initiatives were insufficient to offset the impact of the new acquisition’s amortization schedule.
The earnings miss can be attributed to the combination of the amortization hit and the mix shift toward service revenue. While revenue grew, the cost of integrating BlueHalo and the higher amortization expense reduced operating income, leading to a lower adjusted EPS. The company’s operating leverage was eroded by the lower‑margin mix, and the one‑time amortization charge was a significant drag on profitability.
Guidance for the remainder of the fiscal year reflects management’s cautious stance on profitability while maintaining confidence in revenue growth. The revenue outlook remains unchanged, but the adjusted EBITDA guidance is slightly lower than the prior estimate, signaling that the company expects continued integration costs to weigh on earnings. The projected net loss range indicates that the company will not return to profitability until the integration phase is complete and the service revenue mix improves.
CEO Wahid Nawabi emphasized that the company is “operating from a position of strength” and that the BlueHalo acquisition will “create a more diversified global leader in defense technologies.” He noted that the record revenue and high bookings demonstrate robust demand, but acknowledged that the company must manage integration costs and margin compression to restore profitability in the near term. The long‑term outlook remains positive, contingent on successful integration and the ability to leverage the expanded capabilities to capture growing defense spending.”
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