AeroVironment’s first quarter saw a positive market reaction as the company’s revenue growth outpaced Wall Street expectations, reflecting strong demand for its unmanned systems and defense technology products. Management cited the launch of three new offerings—P550, JUMP 20X, and Red Dragon—and robust loitering munitions sales, especially Switchblade, as primary growth drivers. CEO Wahid Nawabi emphasized that “our investments in all business segments helped drive demand for our products, which led to key domestic and international wins.” International momentum and sizable contract wins, particularly with the U.S. Army and allied nations, contributed to the quarter’s performance.
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AeroVironment (AVAV) Q1 CY2025 Highlights:
- Revenue: $275.1 million vs analyst estimates of $243.7 million (39.6% year-on-year growth, 12.9% beat)
- Adjusted EPS: $1.61 vs analyst estimates of $1.41 (13.9% beat)
- Adjusted EBITDA: $61.6 million vs analyst estimates of $55.53 million (22.4% margin, 10.9% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $2.90 at the midpoint, missing analyst estimates by 27.9%
- EBITDA guidance for the upcoming financial year 2026 is $310 million at the midpoint, above analyst estimates of $240.7 million
- Operating Margin: 5%, up from 3% in the same quarter last year
- Market Capitalization: $12.11 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions AeroVironment’s Q1 Earnings Call
- Louie DiPalma (William Blair) asked about the U.S. Army’s transformation initiative and drone procurement plans. CEO Wahid Nawabi explained that these represent incremental opportunities and that AeroVironment is positioned to benefit from modernization priorities in drones and counter-UAS technologies.
- Greg Conrad (Jefferies) pressed on revenue guidance ranges and Blue Halo integration. Nawabi clarified that contract timing, especially U.S. DoD awards, drives the forecast range, and early integration focus is on cost—not revenue—synergies.
- Peter Arment (Baird) questioned segment-level growth variability, especially in Autonomous Systems. Nawabi attributed this to timing and scale of U.S. government contracts, emphasizing the company’s readiness to deliver if budget approvals are timely.
- Andre Madrid (BTIG) inquired about potential impact from a proposed 5% NATO defense spending pledge. Nawabi said AeroVironment is well-positioned to meet increased European demand due to its proven, scalable systems and established presence.
- Pete Skibitski (Alembic Global) sought clarification on backlog dynamics and capital expenditures. Management confirmed backlog changes resulted from conversion of unfunded to funded contracts, not cancellations, and discussed elevated CapEx to support production for upcoming large programs.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will be closely monitoring (1) progress on integrating Blue Halo’s technologies and realizing expected cost and operational synergies, (2) execution against major U.S. and international defense contracts—including Switchblade and new product orders, and (3) expansion of manufacturing capacity to meet growing demand. Additional focus will be on AeroVironment’s ability to secure wins in NATO markets as European defense budgets increase.
AeroVironment currently trades at $244.75, up from $191.22 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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