AeroVironment, Inc. (AVAV) announced a three‑year Other Transaction Agreement with the U.S. Army’s Long‑Range Reconnaissance (LRR) program that carries an initial base value of $13.2 million and options that could raise the total contract value to $42 million.
The award covers the company’s P550 unmanned aircraft system, an all‑battery electric platform that can take off and land vertically, carry up to 15 pounds of payload, and sustain five hours of endurance. The P550’s modular open‑systems architecture and autonomous flight capabilities are designed to meet the Army’s need for long‑range, contested‑environment ISR assets that can be deployed without a runway.
AeroVironment’s Q3 fiscal 2025 revenue fell 10% to $167.6 million, and the company reported a net loss of $1.8 million, a swing from a $13.9 million profit in the prior year. Gross margin rose to 38% from 36% year‑over‑year, reflecting higher mix in high‑margin autonomous systems. The new LRR contract adds a stable, long‑term revenue stream that will help offset the recent profitability dip and support the company’s focus on autonomous ISR solutions.
"The P550 was engineered to meet the Army’s unique operational requirements," said Jason Hendrix, AeroVironment’s vice president of Small Uncrewed Aerial Systems. "This award confirms the Army’s confidence in our technology and our ability to deliver on schedule and within budget." Trace Stevenson, president of Autonomous Systems, added that the contract “empowers warfighters with advanced ISR capabilities and strengthens our position in the growing U.S. defense drone market.”
The LRR program is a key component of the Army’s broader effort to field a fleet of Group 2 UAS that can operate at ranges beyond the reach of current systems. By securing this contract, AeroVironment gains a foothold in a program that is expected to field multiple platforms across the Army’s maneuver battalions. The company’s competitive advantage lies in its modular design, autonomous flight software, and proven vertical‑take‑off capability, positioning it ahead of rivals such as Edge Autonomy in the contested‑environment ISR niche.
Overall, the contract signals continued demand for AeroVironment’s autonomous systems and provides a foundation for future growth. The options for up to $42 million underscore the Army’s confidence in the P550 and the company’s delivery capabilities, while the base award offers a tangible boost to the company’s revenue and margin profile in a period of financial volatility.
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