TLDR
- AeroVironment Q3 revenue jumps 143%, fueled by BlueHalo acquisition.
- Gross margins drop to 24% due to higher expenses and amortization costs.
- $151M goodwill impairment drives Q3 net loss despite strong revenue.
- Operating loss hits $179M; adjusted EBITDA rises to $44.5M.
- Funded backlog hits record $1.1B, with bookings of $2.1B year-to-date.
AeroVironment, Inc. (AVAV) shares closed lower after the defense technology company released fiscal third-quarter results showing mixed performance. The stock fell 2.52% to $221.57 despite reporting sharply higher revenue and strong order activity. However, a major goodwill impairment and rising expenses weighed on operating results during the quarter.
Revenue Surges as BlueHalo Acquisition Expands Operations
AeroVironment reported $408.0 million in third-quarter revenue for fiscal 2026. The figure increased 143% from $167.6 million during the same quarter last year. Growth came from higher product sales and expanded service revenue across defense programs.
Product revenue increased significantly as new systems deliveries accelerated during the quarter. Service revenue also climbed as the company expanded operational support and technology integration activities. The BlueHalo acquisition contributed notable revenue across both product and service segments.
The Autonomous Systems segment generated $278.7 million in revenue during the quarter. Meanwhile, the Space, Cyber and Directed Energy segment produced $129.3 million in revenue. Combined segment performance drove strong top-line expansion during the reporting period.
Margins Decline as Expenses and Amortization Increase
Gross profit reached $98.8 million during the quarter, compared with $63.2 million one year earlier. Gross margin declined to 24% from 38% in the prior year period. The shift reflected higher service revenue and increased amortization expenses following the BlueHalo acquisition.
Intangible amortization and purchase accounting adjustments totaled $12.7 million during the quarter. These costs rose sharply from $3.7 million recorded in the comparable period last year. The accounting charges reduced reported profitability despite higher overall revenue.
Operating results also reflected higher selling, general and administrative costs. Additional headcount and integration expenses related to the BlueHalo acquisition contributed to the increase. Research and development spending also rose as the company expanded platform commercialization efforts.
Goodwill Impairment Drives Net Loss Despite Strong Order Growth
AeroVironment recorded a $151.3 million goodwill impairment related to its Space reporting unit. The adjustment followed a stop-work order affecting the BADGER phased array antenna program. Management revised long-term cash flow estimates and recognized the impairment during the quarter.
The company reported an operating loss of $179.0 million. The previous year period recorded an operating loss of only $3.1 million. The impairment charge and higher expenses significantly affected operating performance.
Net loss reached $156.6 million, or $3.15 per diluted share. Adjusted EBITDA improved to $44.5 million from $21.8 million a year earlier. Meanwhile, funded backlog expanded to a record $1.1 billion as strong bookings continued.
Order activity remained robust during the fiscal year despite operational adjustments. Bookings reached $2.1 billion during the first nine months of fiscal 2026. The book-to-bill ratio stood at 1.6, indicating sustained demand for AeroVironment’s defense technologies.
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