AeroVironment(AVAV) - 2026 Q1 - Quarterly Results

Executive Summary & First Quarter Highlights First Quarter Highlights AeroVironment reported a strong first quarter for fiscal year 2026, marked by the successful acquisition of BlueHalo, which significantly contributed to record revenue and backlog. The company also achieved substantial year-over-year growth in both total and legacy revenue - Successfully closed the acquisition of BlueHalo, which contributed $235.2 million of revenue in the first quarter[5] Q1 FY2026 Revenue Highlights | Metric | Q1 FY2026 | YoY Change | | :------------------- | :---------- | :--------- | | Record First Quarter Revenue | $454.7 million | +140% | | Legacy Revenue | $219.5 million | +16% | - Achieved record first quarter backlog of $1.1 billion and bookings of $399.0 million[5] - Visibility of 82% to the midpoint of fiscal year 2026 revenue guidance range as of September 9, 2025[5] CEO Commentary CEO Wahid Nawabi highlighted the continued strength across both Autonomous Systems and Space, Cyber and Directed Energy segments, driven by record revenue and backlog. He expressed confidence in the company's ability to deliver best-in-class solutions aligned with customer priorities and to capture growing demand through innovative solutions and scalable manufacturing capacity - Continued strength across both Autonomous Systems and Space, Cyber and Directed Energy segments with record revenue and backlog[1] - Confident in the ability to deliver best-in-class solutions aligned to customers' highest priorities across all domains[1] - Exceptionally well positioned to capture growing demand due to innovative solutions and manufacturing capacity that can quickly scale[1] Fiscal 2026 First Quarter Financial Performance Revenue Analysis AeroVironment reported record revenue for the first quarter of fiscal 2026, significantly increasing year-over-year, primarily driven by the BlueHalo acquisition and growth in both product sales and service revenue across its segments Q1 FY2026 Revenue Performance | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | YoY Change | | :---------------- | :------------------- | :------------------- | :--------- | | Total Revenue | $454.7 | $189.5 | +140% | | Product Sales | $313.5 | $159.5 | +96.5% | | Contract Services | $141.1 | $29.9 | +371.9% | - The acquisition of BlueHalo contributed $123.7 million to product revenue and $111.5 million to service revenue in the current quarter[2] Q1 FY2026 Segment Revenue | Segment | Revenue (Millions) | | :---------------- | :----------------- | | Autonomous Systems (AxS) | $285.3 | | Space, Cyber and Directed Energy (SCDE) | $169.4 | Gross Margin Gross margin increased in absolute terms but decreased significantly as a percentage of revenue due to higher intangible amortization and other non-cash purchase accounting expenses, as well as an increased proportion of service revenue resulting from the BlueHalo acquisition Q1 FY2026 Gross Margin Performance | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | YoY Change | | :---------------- | :------------------- | :------------------- | :--------- | | Total Gross Margin | $95.1 | $81.5 | +17% | | Gross Margin % | 21% | 43% | -22 ppts | - Gross margin was negatively impacted by $37.4 million of intangible amortization and other related non-cash purchase accounting expenses in Q1 FY2026, compared to $3.7 million in Q1 FY2025[3] Operating Income/Loss The company reported an operating loss in Q1 FY2026, a significant decline from operating income in the prior year, primarily due to increased selling, general and administrative (SG&A) and research and development (R&D) expenses, heavily influenced by BlueHalo acquisition-related expenses and intangible amortization Q1 FY2026 Operating Performance | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | | :-------------------- | :------------------- | :------------------- | | (Loss) Income from Operations | $(69.3) | $23.1 | - The current quarter was negatively impacted by $79.7 million of intangible amortization and other related non-cash purchase accounting expenses, compared to $4.8 million in the prior year[4] - SG&A expense increased by $97.5 million, including $41.2 million of intangible amortization and $23.7 million of acquisition-related expenses. R&D expense increased by $8.5 million[4][6] Other Income/Loss and Tax Impact Other loss, net, increased substantially due to higher interest expense from BlueHalo acquisition financing, while the company recorded a benefit from income taxes due to the pre-tax loss Q1 FY2026 Other Loss and Tax Impact | Metric | Q1 FY2026 (Millions) | Q1 FY2025 (Millions) | | :-------------------- | :------------------- | :------------------- | | Other (Loss) Income, net | $(15.1) | $(0.5) | | Benefit from Income Taxes | $(15.2) | $1.5 (Provision) | - The increase in other loss was primarily due to an increase in interest expense related to the term and revolver facility loans obtained in conjunction with the BlueHalo acquisition[7] - The decrease in income tax provision year-over-year was primarily due to the loss before income taxes[8] Net Income/Loss and EPS AeroVironment reported a net loss and negative diluted EPS for Q1 FY2026, a significant reversal from net income in the prior year, largely due to the substantial impact of intangible amortization and other non-cash purchase accounting expenses related to the BlueHalo acquisition Q1 FY2026 Net Income/Loss and EPS | Metric | Q1 FY2026 | Q1 FY2025 | | :-------------------- | :------------------- | :------------------- | | Net (Loss) Income | $(67.4) million | $21.2 million | | Diluted EPS | $(1.44) | $0.75 | - The current quarter was negatively impacted by $79.7 million, or $1.34 per diluted share, of intangible amortization and other related non-cash purchase accounting expenses, compared to $4.8 million, or $0.13 per diluted share, in the prior-year period[9] Non-GAAP Financial Measures (Q1) Non-GAAP adjusted EBITDA increased year-over-year, while non-GAAP diluted EPS decreased, reflecting adjustments for acquisition-related expenses and intangible amortization Q1 FY2026 Non-GAAP Financial Measures | Metric | Q1 FY2026 | Q1 FY2025 | YoY Change | | :-------------------- | :------------------- | :------------------- | :--------- | | Non-GAAP Adjusted EBITDA | $56.6 million | $37.2 million | +52.1% | | Non-GAAP Earnings per Diluted Share | $0.32 | $0.89 | -64% | Backlog and Bookings AeroVironment achieved a record funded backlog as of August 2, 2025, significantly increasing from the previous fiscal year-end, with strong bookings during the quarter, providing substantial revenue visibility for the current fiscal year Backlog and Bookings Data | Metric | As of August 2, 2025 | As of April 30, 2025 | | :---------------- | :------------------- | :------------------- | | Funded Backlog | $1.1 billion | $726.6 million | | Bookings (Q1 FY2026) | $399.0 million | N/A | - The company has visibility of 80% of fiscal year 2026 revenue[11] Fiscal 2026 Full Year Outlook Full Year Guidance The company reiterated its full-year fiscal 2026 guidance, projecting significant revenue growth and positive non-GAAP adjusted EBITDA, while expecting a net loss and GAAP loss per diluted share Fiscal Year 2026 Guidance | Metric | Range | | :-------------------------- | :------------------- | | Revenue | $1.9 billion - $2.0 billion | | Net Loss | $(77) million - $(72) million | | Non-GAAP Adjusted EBITDA | $300 million - $320 million | | Loss per Diluted Share | $(1.63) - $(1.53) | | Non-GAAP Earnings per Diluted Share | $3.60 - $3.70 | Forward-Looking Statements and Risks The company's outlook is forward-looking and reflects management's view of current and future market conditions, subject to various risks and uncertainties. These include challenges related to integrating acquisitions, securing government contracts, responding to market demand, competitive pressures, regulatory changes, and general economic conditions - Estimates are forward-looking and reflect management's view of current and future market conditions, subject to certain risks and uncertainties[13][19] - Key risk factors include: the impact of successfully integrating acquisitions (e.g., BlueHalo), reliance on U.S. government sales and funding availability, ability to win R&D and procurement programs, changes in government spending, supply chain disruptions, and compliance with extensive regulatory requirements[13][20] - Other risks involve unexpected technical and marketing difficulties, potential security and cyber threats, failure to innovate or expand into new markets, unexpected changes in operating expenses, and litigation activity[20] Consolidated Financial Statements Consolidated Statements of Operations This section presents the detailed breakdown of revenues, costs, and expenses, leading to the net loss for the three months ended August 2, 2025, compared to the prior year, reflecting the significant impact of the BlueHalo acquisition - Provides a comprehensive view of the company's financial performance, detailing product sales, contract services, cost of sales, gross margin, operating expenses (SG&A, R&D), other income/loss, and tax provision, culminating in net income/loss and earnings per share[23] Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and stockholders' equity as of August 2, 2025, compared to April 30, 2025, showing significant increases in total assets, goodwill, intangibles, and long-term debt primarily due to the BlueHalo acquisition Consolidated Balance Sheet Highlights | Metric | August 2, 2025 (Thousands) | April 30, 2025 (Thousands) | | :-------------------------- | :------------------------- | :------------------------- | | Total Assets | $5,624,037 | $1,120,567 | | Cash and Cash Equivalents | $685,803 | $40,862 | | Intangibles, net | $1,118,848 | $48,711 | | Goodwill | $2,539,560 | $256,781 | | Total Liabilities | $1,106,958 | $234,061 | | Long-term debt | $725,703 | $30,000 | | Total Stockholders' Equity | $4,427,079 | $886,507 | Consolidated Statements of Cash Flows This section details the cash flows from operating, investing, and financing activities for the three months ended August 2, 2025, highlighting a significant net increase in cash primarily from financing activities related to the BlueHalo acquisition, despite cash used in operating and investing activities Consolidated Statements of Cash Flows Highlights | Metric | Q1 FY2026 (Thousands) | Q1 FY2025 (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 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 | - Business acquisitions, net of cash acquired, accounted for $(844,580) thousand in investing activities[27] - Financing activities included proceeds from shares issued ($968,515 thousand) and convertible debt ($726,944 thousand)[27] Reportable Segment Results The report provides segment-level revenue and adjusted EBITDA, showing the significant contribution of the newly acquired Space, Cyber and Directed Energy (SCDE) segment and continued growth in the Autonomous Systems (AxS) segment Q1 FY2026 Segment Revenue | Segment | Revenue (Thousands) | | :------------------------------------ | :------------------ | | Autonomous Systems (AxS) | $285,324 | | Space, Cyber and Directed Energy (SCDE) | $169,352 | | Total | $454,676 | Q1 FY2026 Segment Adjusted EBITDA | Segment | Adjusted EBITDA (Thousands) | | :------------------------------------ | :-------------------------- | | Autonomous Systems (AxS) | $52,760 | | Space, Cyber and Directed Energy (SCDE) | $3,796 | | Total | $56,556 | - In Q1 FY2025, only the AxS segment reported revenue of $189,483 thousand and adjusted EBITDA of $37,178 thousand, indicating the new contribution from SCDE[29] Non-GAAP Measures Reconciliation and Explanation Non-GAAP Earnings per Diluted Share Reconciliation This section reconciles GAAP diluted EPS to non-GAAP diluted EPS by adjusting for items such as amortization of acquired intangible assets, acquisition-related expenses, and equity method/securities investment activity, providing a clearer view of operational performance Q1 FY2026 Non-GAAP EPS Reconciliation | Item | Per Diluted Share | | :---------------------------------------------------------------- | :---------------- | | (Loss) earnings per diluted share (GAAP) | $(1.44) | | Amortization of acquired intangible assets and other purchase accounting adjustments | $1.34 | | Acquisition-related expenses | $0.52 | | Equity method and equity securities investments activity, net | $(0.10) | | Earnings per diluted share as adjusted (non-GAAP) | $0.32 | - The forecast for FY2026 non-GAAP earnings per diluted share is $3.60 - $3.70, adjusted from a forecast GAAP loss per diluted share of $(1.63) - $(1.53)[34] Non-GAAP Adjusted EBITDA Reconciliation This section reconciles GAAP net income/loss to non-GAAP adjusted EBITDA by adding back interest, taxes, depreciation, amortization, stock-based compensation, acquisition-related expenses, and other non-cash items, offering a measure of core operating profitability Q1 FY2026 Non-GAAP Adjusted EBITDA Reconciliation | Item | Amount (Millions) | | :---------------------------------------------------------------- | :---------------- | | Net (loss) income (GAAP) | $(67.4) | | Interest expense, net | $17.4 | | Provision for income taxes | $(15.2) | | Depreciation and amortization | $90.3 | | EBITDA (non-GAAP) | $25.1 | | Amortization of cloud computing arrangement implementation | $0.9 | | Stock-based compensation | $11.4 | | Acquisition-related expenses | $23.7 | | Equity method and equity securities investments activity, net | $(4.5) | | Adjusted EBITDA (non-GAAP) | $56.6 | - The forecast for FY2026 non-GAAP adjusted EBITDA is $300 - $320 million, adjusted from a forecast GAAP net loss of $(77) - $(72) million[35] Statement Regarding Non-GAAP Measures The company utilizes non-GAAP measures to provide additional insights into its long-term profitability trends and to facilitate comparisons with prior periods and peers, emphasizing that these measures should be considered supplementary to GAAP and may not be comparable to similarly titled measures reported by other companies - Non-GAAP measures are considered in addition to, not as a replacement for or superior to, comparable GAAP measures[21][36] - Management believes these measures provide useful information by offering additional ways of viewing results, helping investors understand long-term profitability trends and compare performance[36] - Non-GAAP EPS excludes acquisition-related expenses, intangible amortization, and equity investment activities for consistent comparisons. Adjusted EBITDA is defined as net income before interest, taxes, depreciation, and amortization, adjusted for certain non-cash and non-operating items[37][38] Company Overview About AeroVironment, Inc. AeroVironment is a defense technology leader delivering integrated capabilities across air, land, sea, space, and cyber. The company specializes in developing and deploying autonomous systems, precision strike systems, counter-UAS technologies, and other advanced defense solutions to meet current and future mission needs - AeroVironment is a defense technology leader delivering integrated capabilities across air, land, sea, space, and cyber[18] - The company develops and deploys autonomous systems, precision strike systems, counter-UAS technologies, space-based platforms, directed energy systems, and cyber and electronic warfare capabilities[18] - Possesses a national manufacturing footprint and a deep innovation pipeline, delivering proven systems and future-defining capabilities with speed, scale, and operational relevance[18] Investor Information Conference Call and Presentation AeroVironment hosted a conference call and webcast on September 9, 2025, to discuss the Q1 FY2026 results, with access details provided for live participation and subsequent replay, along with a supplementary investor presentation - A conference call was hosted on Tuesday, September 9, 2025, at 4:30 pm Eastern Time[14] - Investors could access the live audio webcast via a participant registration link or the Investor Relations page of the company's website[15] - A supplementary investor presentation for the first quarter fiscal year 2026 is accessible at https://investor.avinc.com/events-and-presentations, and an audio replay will be archived on the Investor Relations section of the Company's website[16][17] Contact Information Contact details for investor relations are provided for further inquiries regarding AeroVironment - Contact Person: Denise Pacioni[40] - Phone: +1 805-795-4108[40] - Email: ir@avinc.com; Website: https://investor.avinc.com/contact-and-faq/contact-us[40](index=40&type=chunk)