Core Insights - AeroVironment, Inc. reported fiscal first-quarter results that exceeded analyst expectations, driven by the acquisition of BlueHalo, despite incurring significant acquisition-related expenses leading to a quarterly loss [1][3] Financial Performance - The company posted adjusted earnings of $0.32 per share, slightly above the expected $0.31, with revenue reaching $454.7 million, marking a 140% year-over-year increase and surpassing the consensus of $442.12 million [2] - BlueHalo contributed $235.2 million in revenue, while legacy operations experienced a 16% growth to $219.5 million [2] Backlog and Bookings - AeroVironment reported a record quarterly backlog of $1.1 billion and $399 million in bookings [3] Net Loss - The company recorded a net loss of $67.4 million, or $1.44 per share, compared to a net income of $21.2 million, or $0.75 per share, from the previous year, primarily due to $79.7 million in intangible amortization and other non-cash accounting charges related to the BlueHalo acquisition [3] Future Guidance - The company reaffirmed its fiscal 2026 guidance, projecting revenue between $1.9 billion and $2.0 billion and adjusted earnings of $3.60 to $3.70 per share, both above consensus estimates [4]

Group 1 - The company AV has announced the opening of a new office in Hereford, United Kingdom [1] - AV has entered into a coproduction agreement with UK-based TIA for its Tomahawk Grip controller [1]

Core Insights - AeroVironment (NASDAQ: AVAV) reported Q1 2026 results, surpassing analyst estimates on revenue but falling short on core earnings per share [1] - The stock has experienced a 7% decline since the last report [1] Company Performance - Revenue exceeded analyst expectations, indicating strong top-line growth [1] - Core earnings per share did not meet analyst estimates, suggesting potential concerns regarding profitability [1] Market Context - The investing group, The Aerospace Forum, focuses on identifying investment opportunities within the aerospace, defense, and airline sectors [1] - The group utilizes data analytics to provide insights and context on industry developments that may impact investment strategies [1]

Core Insights - AeroVironment (NASDAQ: AVAV) reported Q1 2026 results, surpassing analyst expectations on revenue but falling short on core earnings per share [1] - The stock has declined by 7% since the last report [1] Company Performance - Revenue exceeded analyst estimates, indicating strong sales performance [1] - Core earnings per share did not meet expectations, suggesting potential concerns regarding profitability [1] Market Context - The investing group, The Aerospace Forum, focuses on identifying investment opportunities within the aerospace, defense, and airline sectors [1] - The group utilizes data analytics to provide insights and context for industry developments [1]

Group 1 - AeroVironment has raised its earnings outlook following a strong Q1 report, driven by increasing defense demand [1] - The company announced a new contract that contributes to its growing backlog, reflecting positive momentum in the defense sector [1] - AeroVironment's stock has trended higher this year, influenced by proposed increases to the U.S. defense budget and greater spending in the defense industry [1] Group 2 - AeroVironment has achieved a composite rating of 98, indicating strong performance among top-rated stocks [4] - The company is recognized as a leading drone maker, joining an elite group of stocks with relative strength ratings over 90 [4] - The overall market sentiment remains mixed, with AeroVironment's performance standing out amidst challenges faced by other tech stocks [4]

AeroVironment, Inc. (NASDAQ:AVAV) is one of the stocks in focus in Jim Cramer’s game plan for this week. Cramer said that the company is “worth watching,” and stated: “Here’s one worth watching, drone maker AeoVironment, which reports Tuesday after the close. We had them on when they reported last, okay, and I loved what I heard, but I felt like I was alone. Stock was doing nothing, even when it dipped. Then AVAV, when I talked it up on Squawk on the Street, the darn thing levitated, and it never came bac ...

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AeroVironment (AVAV) came out with quarterly earnings of $0.32 per share, missing the Zacks Consensus Estimate of $0.34 per share. This compares to earnings of $0.89 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -5.88%. A quarter ago, it was expected that this maker of unmanned aircrafts would post earnings of $1.44 per share when it actually produced earnings of $1.61, delivering a surprise of +11.81%.Over the last four qua ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents unaudited condensed consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | August 2, 2025 (in thousands) | April 30, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | | Cash and cash equivalents | $685,803 | $40,862 | | Accounts receivable, net | $198,293 | $101,967 | | Unbilled receivables and retentions | $463,870 | $290,009 | | Inventories, net | $232,888 | $144,090 | | Total current assets | $1,639,339 | $606,516 | | Property and equipment, net | $148,807 | $50,704 | | Intangibles, net | $1,118,848 | $48,711 | | Goodwill | $2,539,560 | $256,781 | | Total assets | $5,624,037 | $1,120,567 | | Total current liabilities | $274,930 | $172,161 | | Long-term debt | $725,703 | $30,000 | | Total liabilities and stockholders' equity | $5,624,037 | $1,120,567 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income (loss) over a specific period | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended July 27, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :----------- | | Revenue | $454,676 | $189,483 | +140% | | Cost of sales | $359,558 | $108,016 | +233% | | Gross margin | $95,118 | $81,467 | +16.7% | | Selling, general and administrative | $131,276 | $33,795 | +288.5% | | Research and development | $33,114 | $24,613 | +34.5% | | (Loss) income from operations | $(69,272) | $23,059 | -400.4% | | Interest expense, net | $(17,415) | $(239) | +7194.9% | | Net (loss) income | $(67,370) | $21,166 | -418.3% | | Basic Net (loss) income per share | $(1.44) | $0.76 | -289.5% | | Diluted Net (loss) income per share | $(1.44) | $0.75 | -292% | [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) Presents net income (loss) and other comprehensive income (loss) components for the period | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended July 27, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Net (loss) income | $(67,370) | $21,166 | | Change in foreign currency translation adjustments | $639 | $538 | | Total comprehensive (loss) income | $(66,731) | $21,704 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Shows changes in equity accounts, including common stock, additional paid-in capital, and retained earnings | Metric | August 2, 2025 (in thousands) | April 30, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | | Common Stock Shares | 49,932,300 | 28,267,517 | | Common Stock Amount | $6 | $4 | | Additional Paid-In Capital | $4,226,012 | $618,711 | | Retained Earnings | $206,936 | $274,306 | | Accumulated Other Comprehensive Loss | $(5,875) | $(6,514) | | Total Stockholders' Equity | $4,427,079 | $886,507 | - The company issued 17,425,849 shares of common stock for an acquisition, contributing **$2.64 billion** to total stockholders' equity[19](index=19&type=chunk) - Shares issued, net of issuance costs, contributed **$966.85 million** to additional paid-in capital[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended July 27, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Net cash (used in) provided by operating activities | $(123,726) | $28,351 | | Net cash used in investing activities | $(876,648) | $(6,613) | | Net cash provided by (used in) financing activities | $1,645,443 | $(13,954) | | Net increase in cash and cash equivalents | $644,941 | $7,861 | | Cash and cash equivalents at end of period | $685,803 | $81,162 | - Cash used in investing activities significantly increased due to the BlueHalo acquisition, net of cash acquired, totaling **$844.58 million**[21](index=21&type=chunk) - Financing activities provided substantial cash, primarily from proceeds of common stock issuance (**$968.52 million**) and convertible debt (**$726.94 million**)[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of the accounting policies, significant transactions, and financial statement line items [1. Organization and Significant Accounting Policies](index=9&type=section&id=1.%20Organization%20and%20Significant%20Accounting%20Policies) The company reorganized into AxS and SCDE segments following the BlueHalo acquisition - The company reorganized its segments effective May 1, 2025, into Autonomous Systems (AxS) and Space, Cyber, and Directed Energy (SCDE) following the BlueHalo acquisition[23](index=23&type=chunk)[108](index=108&type=chunk) - As of August 2, 2025, the company had approximately **$1.07 billion** in funded backlog, with 80% expected in fiscal 2026[32](index=32&type=chunk) Revenue by Segment (in thousands) | Segment | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :------ | :-------------------------------- | :-------------------------------- | | AxS | $285,324 | $189,483 | | SCDE | $169,352 | — | | Total | $454,676 | $189,483 | Revenue by Customer Category (in thousands) | Customer Category | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | U.S. government | $395,337 | $148,600 | | Non-U.S. government | $59,339 | $40,883 | | Total | $454,676 | $189,483 | [2. Investments](index=16&type=section&id=2.%20Investments) The company's investments include available-for-sale equity securities, warrants, and equity method investments Long-term Investments (in thousands) | Investment Type | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Equity securities and warrants | $3,905 | $1,204 | | Investments in limited partnership funds | $32,362 | $30,423 | | Total long-term investments | $36,267 | $31,627 | Unrealized Gain (Loss) on Equity Securities (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net gain (loss) recognized | $2,701 | $(321) | | Unrealized gain (loss) recognized on equity securities still held | $2,701 | $(321) | [3. Fair Value Measurements](index=17&type=section&id=3.%20Fair%20Value%20Measurements) Financial assets measured at fair value are classified into a three-level hierarchy based on input observability Financial Assets Measured at Fair Value (August 2, 2025, in thousands) | Description | Level 1 | Level 2 | Level 3 | Total | | :---------- | :------ | :------ | :------ | :---- | | Equity securities | $3,180 | $— | $— | $3,180 | | Warrants | $— | $725 | $— | $725 | | Total | $3,180 | $725 | $— | $3,905 | [4. Inventories, net](index=18&type=section&id=4.%20Inventories%2C%20net) Inventories consist of raw materials, work in process, and finished goods, with a reserve for excess and obsolescence Inventories, net (in thousands) | Component | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Raw materials | $113,922 | $52,567 | | Work in process | $95,925 | $73,434 | | Finished goods | $61,420 | $46,761 | | Inventories, gross | $271,267 | $172,762 | | Reserve for inventory excess and obsolescence | $(38,379) | $(28,672) | | Inventories, net | $232,888 | $144,090 | [5. Equity Method Investments](index=18&type=section&id=5.%20Equity%20Method%20Investments) The company holds equity method investments in limited partnership funds, recognizing its share of net gains - The company recorded **$1.79 million** in equity method investment income, net of tax, for the three months ended August 2, 2025, compared to **$65 thousand** for the same period in 2024[58](index=58&type=chunk) - The carrying value of equity method investments was **$32.36 million** at August 2, 2025, an increase from **$30.42 million** at April 30, 2025[58](index=58&type=chunk) - The company has committed to make additional capital contributions of **$5.47 million** to a second limited partnership fund[57](index=57&type=chunk) [6. Warranty Reserves](index=20&type=section&id=6.%20Warranty%20Reserves) The company accrues an estimate for warranty claims, which saw an increase due to an acquisition during the period Warranty Reserve Activity (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $4,189 | $5,538 | | Balance acquired from acquisition | $2,274 | $— | | Warranty expense | $141 | $(647) | | Warranty costs settled | $(321) | $(651) | | Ending balance | $6,283 | $4,240 | [7. Intangibles, net](index=20&type=section&id=7.%20Intangibles%2C%20net) Intangible assets significantly increased due to the BlueHalo acquisition, primarily in technology and customer relations Components of Intangibles (in thousands) | Component | August 2, 2025 | April 30, 2025 | | :-------------------------- | :------------- | :------------- | | Technology | $497,861 | $101,645 | | Customer relationships | $747,682 | $77,588 | | Backlog | $65,008 | $2,963 | | Intangibles, gross | $1,314,243 | $185,888 | | Less accumulated amortization | $(195,395) | $(137,177) | | Intangibles, net | $1,118,848 | $48,711 | - Amortization expense for the three months ended August 2, 2025, was **$58.16 million**, a significant increase from **$4.77 million** in the prior year, primarily due to the BlueHalo acquisition[61](index=61&type=chunk) [8. Goodwill](index=21&type=section&id=8.%20Goodwill) Goodwill increased substantially due to the BlueHalo acquisition, allocated to AxS and SCDE segments Changes in Goodwill Balance by Segment (in thousands) | Segment | Balance at April 30, 2025 | Additions to goodwill | Balance at August 2, 2025 | | :------ | :------------------------ | :-------------------- | :------------------------ | | AxS | $256,781 | $914,683 | $1,171,464 | | SCDE | $— | $1,368,096 | $1,368,096 | | Total | $256,781 | $2,282,779 | $2,539,560 | - The additions to goodwill are primarily from the BlueHalo acquisition, which contributed **$2.28 billion**[62](index=62&type=chunk) [9. Debt](index=21&type=section&id=9.%20Debt) The company restructured debt, securing and repaying a $700 million term loan and $350 million revolving credit facility - On May 1, 2025, the company entered into a **$700 million** Term Loan Facility and a **$350 million** Revolving Credit Facility for the BlueHalo acquisition[65](index=65&type=chunk)[67](index=67&type=chunk) - In July 2025, the Term A Loan and outstanding Revolving Facility balance were fully repaid using proceeds from common stock and 0% Convertible Senior Notes due 2030[69](index=69&type=chunk) Long-term Debt (in thousands) | Debt Type | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Revolving credit facility | $— | $30,000 | | Convertible Notes | $747,500 | $— | | Total long-term debt | $747,500 | $30,000 | | Total long-term debt, net of unamortized debt issuance costs | $725,703 | $30,000 | [10. Convertible Notes](index=23&type=section&id=10.%20Convertible%20Notes) In July 2025, the company issued **$747.5 million** in 0% Convertible Senior Notes due 2030, which are unsecured obligations - The company issued **$747.5 million** aggregate principal amount of 0% Convertible Senior Notes due 2030 in July 2025[71](index=71&type=chunk) - The Notes do not bear regular interest and mature on July 15, 2030, unless earlier repurchased, redeemed, or converted[73](index=73&type=chunk) - The initial conversion rate is 3.1017 shares of common stock per $1,000 principal amount of Notes, representing an initial conversion price of approximately **$322.40** per share[73](index=73&type=chunk) [11. Leases](index=26&type=section&id=11.%20Leases) Lease costs increased significantly, primarily operating lease costs, with longer weighted average lease terms and higher discount rates Total Lease Costs, Net (in thousands) | Lease Cost Type | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $6,850 | $2,430 | | Short term lease cost | $993 | $155 | | Variable lease cost | $899 | $423 | | Total lease costs, net | $8,742 | $3,008 | - The weighted average remaining lease term increased to **80 months** (from 49 months), and the weighted average discount rate increased to **6.8%** (from 5.4%) as of August 2, 2025[80](index=80&type=chunk) [12. Accumulated Other Comprehensive Loss and Reclassifications Adjustments](index=28&type=section&id=12.%20Accumulated%20Other%20Comprehensive%20Loss%20and%20Reclassifications%20Adjustments) The accumulated other comprehensive loss decreased slightly due to a positive change in foreign currency translation adjustments Accumulated Other Comprehensive Loss (in thousands) | Metric | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Balance | $(5,875) | $(6,514) | | Change in foreign currency translation adjustments | $639 | $538 | | Balance as of period end | $(5,875) | $(5,054) | [13. Customer-Funded Research & Development](index=28&type=section&id=13.%20Customer-Funded%20Research%20%26%20Development) Revenue from customer-funded R&D activities significantly increased year-over-year - Revenue from customer-funded R&D was approximately **$60.85 million** for the three months ended August 2, 2025, compared to **$18.56 million** for the same period in 2024[82](index=82&type=chunk) [14. Long-Term Incentive Awards](index=28&type=section&id=14.%20Long-Term%20Incentive%20Awards) The company granted long-term incentive awards (LTIPs) to key employees, with compensation expenses recognized over vesting periods Compensation Expense for LTIPs (in thousands) | LTIP | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Fiscal 2026 LTIP | $809 | $— | | Fiscal 2025 LTIP | $3,859 | $306 | | Fiscal 2024 LTIP | $3,008 | $1,112 | | Fiscal 2023 LTIP | $— | $865 | - The maximum compensation expense for the performance-based portion of the Fiscal 2026 LTIP is **$33.25 million**[84](index=84&type=chunk) [15. Income Taxes](index=32&type=section&id=15.%20Income%20Taxes) The company recorded an income tax benefit for the quarter, with a higher effective tax rate influenced by net loss and new tax legislation Income Tax (Benefit from) Provision and Effective Tax Rate | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | (Benefit from) provision for income taxes | $(15,169,000) | $1,485,000 | | Effective tax rate | 18.0% | 6.6% | - The One Big Beautiful Bill Act (OBBBA) was enacted in July 2025, eliminating the requirement to capitalize U.S. R&D expenses and is expected to significantly reduce cash tax payments for fiscal year ending April 30, 2026[90](index=90&type=chunk)[152](index=152&type=chunk) [16. Share Issuances](index=32&type=section&id=16.%20Share%20Issuances) In July 2025, the company completed a common stock offering, issuing over 4 million shares and generating significant net proceeds - In July 2025, the company issued 4,057,460 shares of common stock, generating gross proceeds of **$1.01 billion** and net proceeds of **$966.85 million** after costs[91](index=91&type=chunk) [17. Business Acquisitions](index=32&type=section&id=17.%20Business%20Acquisitions) On May 1, 2025, the company acquired BlueHalo LLC for approximately $3.48 billion, integrating it into AxS and SCDE segments - On May 1, 2025, the company acquired BlueHalo LLC for merger consideration, net of cash acquired, of **$3.48 billion**[92](index=92&type=chunk)[93](index=93&type=chunk) - The acquisition resulted in the recognition of **$2.28 billion** in goodwill and **$1.13 billion** in intangible assets (technology, customer relationships, backlog)[95](index=95&type=chunk)[101](index=101&type=chunk) BlueHalo Pro Forma Information (Three Months Ended July 27, 2024, in thousands) | Metric | Pro Forma (July 27, 2024) | | :-------------------------------- | :------------------------ | | Revenue | $378,924 | | Net loss attributable to AeroVironment, Inc. | $(88,402) | [18. Pension](index=36&type=section&id=18.%20Pension) The company maintains a small foreign-based defined benefit pension plan, acquired through Telerob, currently in a funded status Funded Status of Pension Plan (April 30, 2025, in thousands) | Metric | Amount | | :-------------------------- | :----- | | Projected benefit obligation | $(3,335) | | Fair value of plan assets | $3,817 | | Funded status of the plan | $482 | Net Periodic Benefit Cost (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net periodic benefit cost | $31 | $28 | [19. Segments](index=36&type=section&id=19.%20Segments) The company operates two reportable segments, AxS and SCDE, using segment adjusted EBITDA as the primary profitability measure Segment Revenue and Adjusted EBITDA (Three Months Ended August 2, 2025, in thousands) | Segment | Revenue | Segment adjusted EBITDA | | :------ | :------ | :---------------------- | | AxS | $285,324 | $52,760 | | SCDE | $169,352 | $3,796 | | Total | $454,676 | $56,556 | Segment Revenue and Adjusted EBITDA (Three Months Ended July 27, 2024, in thousands) | Segment | Revenue | Segment adjusted EBITDA | | :------ | :------ | :---------------------- | | AxS | $189,483 | $37,178 | | SCDE | $— | $— | | Total | $189,483 | $37,178 | Capital Expenditures by Segment (in thousands) | Segment | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------- | :-------------------------------- | :-------------------------------- | | AxS | $15,178 | $4,573 | | SCDE | $16,437 | $— | | Corporate | $453 | $857 | | Total | $32,068 | $5,430 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=41&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, condition, critical accounting estimates, results, backlog, liquidity, and cash flow [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) Management discusses critical accounting estimates for revenue, inventory, intangibles, goodwill, and income taxes, noting potential differences Net (Unfavorable) Favorable Adjustments to Revenue (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Gross favorable adjustments | $2,316 | $812 | | Gross unfavorable adjustments | $(6,459) | $(285) | | Net (unfavorable) favorable adjustments | $(4,143) | $527 | - A goodwill impairment charge of **$18.40 million** was recognized for the Unmanned Ground Vehicles (UGV) reporting unit due to decreased forecasted results[123](index=123&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Revenue grew 140% driven by the BlueHalo acquisition and Switchblade demand, but increased costs led to a net loss Key Financial Results (Three Months Ended August 2, 2025 vs. July 27, 2024, in thousands) | Metric | August 2, 2025 | July 27, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------- | :------------ | :--------- | :--------- | | Revenue | $454,676 | $189,483 | $265,193 | 140% | | Cost of sales | $359,558 | $108,016 | $251,542 | 233% | | Gross margin | $95,118 | $81,467 | $13,651 | 16.7% | | Selling, general and administrative | $131,276 | $33,795 | $97,481 | 288.5% | | Research and development | $33,114 | $24,613 | $8,501 | 34.5% | | (Loss) income from operations | $(69,272) | $23,059 | $(92,331) | -400.4% | | Net (loss) income | $(67,370) | $21,166 | $(88,536) | -418.3% | - The increase in revenue was primarily due to **$123.70 million** in product revenue and **$111.50 million** in service revenue from the BlueHalo acquisition[126](index=126&type=chunk)[127](index=127&type=chunk) - Cost of sales increased significantly due to BlueHalo product lines (**$83.00 million**), intangible amortization (**$29.00 million**), and a mix shift to lower margin products (**$17.00 million**)[128](index=128&type=chunk) [Autonomous Systems (AxS)](index=49&type=section&id=Autonomous%20Systems%20%28AxS%29) The AxS segment experienced substantial revenue growth, driven by the BlueHalo acquisition and Switchblade demand, increasing adjusted EBITDA AxS Segment Performance (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Revenue | $285,324 | $189,483 | $95,841 | 51% | | Segment adjusted EBITDA | $52,760 | $37,178 | $15,582 | 42% | - AxS product revenue increased by **$81.20 million**, with **$50.90 million** from BlueHalo and **$30.30 million** from legacy AV products due to increased Switchblade demand[136](index=136&type=chunk) [Space, Cyber and Directed Energy (SCDE)](index=49&type=section&id=Space%2C%20Cyber%20and%20Directed%20Energy%20%28SCDE%29) The SCDE segment, newly formed from the BlueHalo acquisition, generated significant revenue and adjusted EBITDA in its first quarter SCDE Segment Performance (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $169,352 | $— | | Segment adjusted EBITDA | $3,796 | $— | - The SCDE segment's revenue and adjusted EBITDA are entirely attributable to business units obtained in the BlueHalo acquisition on May 1, 2025[138](index=138&type=chunk)[139](index=139&type=chunk) [Backlog](index=51&type=section&id=Backlog) The company's funded backlog increased significantly, and it maintains a substantial unfunded backlog, which does not guarantee future orders - Funded backlog was approximately **$1.07 billion** as of August 2, 2025, up from **$726.60 million** as of April 30, 2025[141](index=141&type=chunk) - Unfunded backlog stood at **$3.09 billion** as of August 2, 2025, representing potential future orders under various contract types[142](index=142&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) The company enhanced liquidity via stock and convertible notes offerings, repaying acquisition debt, and expects sufficient capital for future needs - In July 2025, the company completed a Common Stock Offering and a Notes Offering, generating aggregate net proceeds of approximately **$1.70 billion**[145](index=145&type=chunk) - Approximately **$965.30 million** of the proceeds were used to repay indebtedness under the Term Loan Facility and Revolving Credit Facility[145](index=145&type=chunk) - As of August 2, 2025, approximately **$338.10 million** was available under the Revolving Facility[146](index=146&type=chunk) [Cash Flows](index=53&type=section&id=Cash%20Flows) Operating cash flows shifted to net use, investing activities increased due to BlueHalo acquisition, and financing activities provided substantial cash Cash Flow Data (in thousands) | Activity | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(123,726) | $28,351 | | Net cash used in investing activities | $(876,648) | $(6,613) | | Net cash provided by (used in) financing activities | $1,645,443 | $(13,954) | - The increase in net cash used in operating activities was primarily due to changes in operating assets and liabilities (**$157.80 million** decrease) and a decrease in net income (**$88.50 million**)[153](index=153&type=chunk) - Net cash used in investing activities increased by **$870.00 million**, mainly due to the **$844.60 million** cash consideration for the BlueHalo acquisition[154](index=154&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=55&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Market risk assessment is largely unchanged, but the issuance of 0% Convertible Senior Notes in July 2025 impacts interest rate risk - The issuance of **$747.50 million** of 0% Convertible Senior Notes in July 2025, used to repay other indebtedness, impacts the company's interest rate risk profile[157](index=157&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls were effective as of August 2, 2025, excluding BlueHalo, which had identified three material weaknesses - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of August 2, 2025[161](index=161&type=chunk) - Management's evaluation of disclosure controls and procedures excludes BlueHalo's controls, which are being integrated[161](index=161&type=chunk) - BlueHalo identified three material weaknesses prior to acquisition: ineffective IT general controls, an ineffective control environment, and ineffective monitoring activities[163](index=163&type=chunk)[164](index=164&type=chunk) [PART II. OTHER INFORMATION](index=59&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, exhibits, and signatures [ITEM 1. LEGAL PROCEEDINGS](index=59&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in class action and PAGA complaints, with an agreement in principle to settle reached in June 2025 - A class action complaint and a PAGA complaint were filed by former employees alleging California Labor Code violations[170](index=170&type=chunk)[172](index=172&type=chunk) - An agreement in principle to settle all claims in the class action and PAGA complaints was reached on June 11, 2025, subject to court approval[171](index=171&type=chunk) [ITEM 1A. RISK FACTORS](index=59&type=section&id=ITEM%201A.%20RISK%20FACTORS) Updated risk factors highlight increased indebtedness, cash flow limitations, and risks related to government budgets and contract funding - Total indebtedness of approximately **$725.00 million** from the Notes could limit cash flow, restrict additional financing, and dilute existing stockholders' interests upon conversion[175](index=175&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk) - A decline in U.S. and other government budgets, changes in spending priorities, or delays in contract awards could significantly and adversely affect future revenue[181](index=181&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=63&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds to report during the period [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=63&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities during the period [ITEM 4. MINE SAFETY DISCLOSURES](index=63&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company [ITEM 5. OTHER INFORMATION](index=63&type=section&id=ITEM%205.%20OTHER%20INFORMATION) EVP and CFO Kevin McDonnell adopted a Rule 10b5-1 trading plan for the sale of 4,296 shares of common stock - Kevin McDonnell, EVP and CFO, adopted a Rule 10b5-1 Trading Plan for the sale of **4,296** shares of common stock, with a term of approximately 8 months[185](index=185&type=chunk) [ITEM 6. EXHIBITS](index=64&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance, debt agreements, and certifications - Key exhibits include the Indenture for the Convertible Notes, the Fourth Amendment to Credit Agreement, and certifications from the CEO and CFO[188](index=188&type=chunk) [SIGNATURES](index=65&type=section&id=SIGNATURES) The report is duly signed by the company's Chairman, CEO, CFO, and Chief Accounting Officer - The report is signed by Wahid Nawabi (CEO), Kevin P. McDonnell (CFO), and Brian C. Shackley (CAO)[192](index=192&type=chunk)

AeroVironment (NasdaqGS:AVAV) Q1 2026 Earnings Call September 09, 2025 04:30 PM ET Company ParticipantsWahid Nawabi - Chairman, President and CEOKevin McDonnell - Executive VP and CFODenise Pacioni - Director of Investor RelationsConference Call ParticipantsAustin Bohlig - AnalystLouie DiPalma - AnalystKen Herbert - AnalystGreg Konrad - AnalystAustin Moeller - AnalystAndre Madrid - AnalystJan Engelbrecht - AnalystTrevor Walsh - AnalystColin Canfield - AnalystJonathan Siegmann - AnalystAnthony Valentini - An ...