Key Takeaways
- AeroVironment delivered Q3 FY2026 earnings of $0.64 per share, falling short of analyst expectations of $0.68–$0.72
- Quarterly revenue totaled $408 million versus analyst projections of $476–$484 million — representing a 15% shortfall
- Year-over-year revenue surged 143%, primarily driven by the BlueHalo acquisition completed in May 2025
- The Space, Cyber, and Directed Energy division saw a 19% decline due to delayed funding and uncertainty surrounding the $1.7 billion SCAR Space Force program
- Management lowered full-year 2026 earnings guidance to $2.75–$3.10 from the previous range of $3.40–$3.55
AeroVironment (AVAV) unveiled its fiscal third-quarter results on March 10, delivering what appeared to be strong growth metrics on the surface. However, investors weren’t buying it. Shares tumbled in extended trading as the market digested disappointing earnings and revenue figures.
The defense technology company recorded earnings per share of $0.64 alongside $408 million in revenue. Analysts had anticipated EPS between $0.68–$0.72 and revenue in the $476–$484 million range. This translates to approximately a 15% revenue miss.
At first glance, a 143% year-over-year revenue increase appears remarkable. However, this surge primarily reflects the integration of BlueHalo, which the company acquired in May 2025. When adjusted for this acquisition, organic revenue growth measured 38% — respectable, but below market expectations.
Profitability metrics also deteriorated. Gross margin contracted to 27% from 40% in the year-ago quarter. Management attributed this compression to supply chain challenges and an unfavorable shift in the product portfolio.
Space Force Contract Uncertainty Weighs Heavy
The earnings miss tells only part of the story. The bigger concern revolves around the Space Force contract situation. BlueHalo provides critical antenna technology for the SCAR (Satellite Communications Augmentation Resource) program, valued at $1.7 billion from the U.S. Space Force.
Market anxiety about this contract surfaced on March 2, when AVAV shares plummeted 17.4% amid speculation that the Space Force might restart the competitive bidding process for SCAR. These concerns now have substance.
AeroVironment disclosed in its quarterly report that SCAR options previously included in unfunded backlog are “no longer expected to be awarded.” This development contributed to a 19% revenue decline in the Space, Cyber, and Directed Energy business unit.
The company maintains $3 billion in unfunded backlog, with $1.4 billion connected to SCAR-related activities. This represents a substantial portion of anticipated future revenue now facing uncertainty.
Funded backlog remained stable at $1.1 billion compared to the previous quarter. More encouragingly, AeroVironment secured $2.1 billion in new contract awards during the first nine months of fiscal 2026 — significantly exceeding the $1.3 billion in revenue recognized during that timeframe.
Reduced Financial Outlook
AeroVironment reduced its fiscal 2026 revenue forecast to $1.9 billion from the previous target of just under $2 billion. Earnings guidance was slashed to $2.75–$3.10 per share, compared to earlier guidance of $3.40–$3.55. The Street consensus had been $3.31.
The updated guidance implies fourth-quarter earnings around $1.50 per share, approximately 30 cents below current analyst estimates.
CEO Wahid Nawabi maintained an optimistic outlook, emphasizing that customer demand for the company’s technology “remains robust.” He highlighted Q4 as potentially delivering record quarterly revenue and noted a “solid start to fiscal year 2027.”
The Autonomous Systems division — focused on unmanned aircraft — demonstrated strength, with Uncrewed Aircraft Systems revenue climbing more than 50% versus FY2025.
AVAV concluded regular trading at $221.57, down 2.5% for the session, before declining an additional ~9% after hours. The shares are trading approximately 47% below their 52-week peak of $417.86, while remaining up roughly 80% over the trailing twelve months.
The company currently commands a market capitalization of approximately $11.05 billion.
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