Key Takeaways

  • AeroVironment delivered Q3 FY2026 EPS of $0.64, falling short of Wall Street’s $0.68–$0.72 expectation
  • Quarterly revenue reached $408 million against analyst forecasts of $476–$484 million — approximately 15% below expectations
  • Year-over-year sales increased 143%, primarily driven by the BlueHalo acquisition completed in May 2025
  • Space, Cyber, and Directed Energy division revenue declined 19% amid funding postponements and jeopardy surrounding the $1.7 billion SCAR Space Force contract
  • Management revised full-year 2026 EPS outlook downward to $2.75–$3.10 from previous guidance of $3.40–$3.55

AeroVironment (AVAV) unveiled its fiscal third-quarter results on March 10, delivering growth figures that appeared strong at first glance but ultimately disappointed investors. Shares tumbled during after-hours trading as market participants digested the earnings and revenue shortfall.

The company delivered EPS of $0.64 alongside revenue of $408 million. Analysts had anticipated earnings per share in the $0.68–$0.72 range with revenue between $476–$484 million. The revenue gap represents approximately 15% below consensus.


AVAV Stock Card
AeroVironment, Inc., AVAV

Revenue expansion of 143% year-over-year appears impressive initially. However, the BlueHalo acquisition completed in May 2025 contributed significantly to this growth. When excluding this acquisition, comparable sales advanced 38% — a respectable figure that failed to meet market expectations.

Gross margin experienced compression, declining to 27% from 40% during Q3 FY2025. Management attributed this contraction to supply chain challenges and changing product mix dynamics.

SCAR Contract Uncertainty

The primary concern extends beyond the quarterly miss — the Space Force contract situation represents a more significant issue. BlueHalo provides antennas for the SCAR (Satellite Communications Augmentation Resource) program, valued at $1.7 billion with the U.S. Space Force.

Market anxiety about this contract began on March 2, when AVAV plummeted 17.4% on speculation that the Space Force might reopen the SCAR contract bidding process. These concerns have gained credibility.

AeroVironment acknowledged in its earnings announcement that SCAR options within its unfunded backlog are “no longer expected to be awarded.” The Space, Cyber, and Directed Energy division experienced a 19% quarterly decline stemming from this development.

The company maintains a total unfunded backlog of $3 billion, with $1.4 billion connected to SCAR-related activities. This represents a substantial portion of prospective revenue facing uncertainty.

Funded backlog remained stable at $1.1 billion compared to the previous quarter. Meanwhile, AeroVironment secured $2.1 billion in new orders during the first nine months of the fiscal year — significantly exceeding the $1.3 billion in sales recorded during the same timeframe.

Revised Financial Outlook

AeroVironment reduced its full-year 2026 revenue projection to $1.9 billion from the previous estimate approaching $2 billion. The company lowered EPS guidance to $2.75–$3.10 from earlier expectations of $3.40–$3.55. Analyst consensus stood at $3.31.

The updated guidance suggests Q4 EPS around $1.50, approximately 30 cents below current analyst projections.

CEO Wahid Nawabi maintained an optimistic outlook, emphasizing that customer demand for the company’s products “remains robust” while highlighting Q4 as a potentially record-setting revenue quarter. He referenced a “solid start to fiscal year 2027” as well.

The Autonomous Systems division — encompassing the drone business — demonstrated resilience, with Uncrewed Aircraft Systems revenue climbing more than 50% relative to FY2025.

AVAV concluded regular trading at $221.57, declining 2.5% during the session, before sliding an additional ~9% after hours. The stock currently trades approximately 47% beneath its 52-week peak of $417.86, while maintaining gains of roughly 80% over the trailing 12 months.

The company’s market capitalization currently sits at approximately $11.05 billion.