AeroVironment stock surges as AxS growth offsets BlueHalo weakness
AeroVironment Inc. reported record Q4 FY2026 revenue of $641.62 million, beating estimates, fueled by 80% year-on-year growth in its Autonomous Systems (AxS) segment. While the BlueHalo acquisition weighed on margins, strong demand for Switchblade and Titan systems drove performance. The company provided fiscal 2027 sales guidance of $2.125-$2.225 billion, with adjusted EBITDA expected between $305 million and $325 million.
*this image is generated using AI for illustrative purposes only.
AeroVironment Inc. reported record fourth-quarter fiscal 2026 revenue of $641.62 million, surpassing analyst estimates of $558.81 million, driven by robust demand for its drone and loitering munition systems and the acquisition of BlueHalo. This decisive performance triggered a sector-wide rally in drone technology stocks, with shares of AeroVironment trading 17.48% higher at $164.30. The company's results highlight the outsized momentum of its Autonomous Systems (AxS) segment, which grew 80% year-on-year, while the BlueHalo portfolio continues to weigh on overall revenue growth and profits, according to BTIG analyst Andre Madrid.
Fourth Quarter Financial Highlights
AeroVironment reported adjusted earnings per share of $1.84, exceeding the consensus estimate of $1.46. Organic revenue increased 31% year over year, supported by strong demand for Switchblade loitering munitions, Titan Counter-UAS systems, and JUMP 20 tactical drones. The combined acquisitions of BlueHalo on May 1, 2025, and Empirical Systems Aerospace, Inc. on March 16, 2026, contributed $282.3 million of revenue to the quarter. Management highlighted a funded backlog of approximately $1.2 billion and annual bookings of $2.7 billion with a book-to-bill ratio of 1.4.
| Metric | Q4 FY2026 | Q4 FY2025 | FY2026 | FY2025 |
|---|---|---|---|---|
| Revenue | $641.6 million | $275.1 million | $1,976.8 million | $820.6 million |
| Gross Margin | $202.6 million | $100.3 million | $500.6 million | $318.6 million |
| Gross Margin % | 32% | 36% | — | — |
| Income from Operations | $56.9 million | $13.8 million | $(311.0) million | $40.8 million |
| Net Income (Loss) | $63.2 million | $16.7 million | $(265.1) million | $43.6 million |
| EPS (Diluted) | $1.25 | $0.59 | $(5.40) | $1.55 |
| Non-GAAP Adjusted EBITDA | $140.1 million | $61.6 million | $286.1 million | $146.4 million |
| Non-GAAP EPS (Diluted) | $1.84 | $1.61 | $3.31 | $3.28 |
Segment Performance and Profitability
The Autonomous Systems (AxS) segment generated $492.4 million in revenue, accounting for 76% of total company revenue, while the Space, Cyber and Directed Energy (SCDE) segment contributed $149.2 million. Adjusted EBITDA reached a record $140.1 million, with an adjusted EBITDA margin of 22%. Fourth-quarter gross margin of $202.6 million represented a 102% increase year-over-year, though the margin percentage declined to 32% from 36% due to a higher proportion of service revenue from the BlueHalo acquisition and increased non-cash purchase accounting expenses. BTIG noted that AxS achieved a 28% adjusted EBITDA margin in the quarter, partially offset by weaker SCDE margins.
Analyst Reactions and Fiscal 2027 Outlook
BTIG analyst Andre Madrid reiterated a Buy rating and a price target of $205, citing programmatic growth drivers including Switchblade, Red Dragon, and Titan. However, growth was partially offset by weakness at the SCDE segment, driven by the SCAR program termination and government funding delays that weighed on the Cyber and Mission Systems (CMS) business. While demand for SCDE platforms remains significant, timing is uncertain with funding delays expected to persist into late 2026 or early 2027. Other analysts, including RBC Capital and Stifel, adjusted their price targets following the earnings announcement. Management guided to fiscal 2027 sales of $2.125 billion to $2.225 billion, representing 10% growth and coming in line with expectations. The company projected adjusted EBITDA of $305 million to $325 million and adjusted earnings of $3.02 to $3.34 per share.
How long will the BlueHalo acquisition continue to dilute overall margins, and what specific integration milestones are needed to restore profitability?
Can the Autonomous Systems segment sustain its 80% year-on-year growth rate without the boost from recent acquisitions?
What is the expected timeline for resolving the government funding delays affecting the SCDE segment's Cyber and Mission Systems business?
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