AeroVironment (NASDAQ:AVAV) reported record first-quarter fiscal 2027 revenue and funded backlog, while reaffirming its full-year outlook as it expands production capacity for uncrewed systems, loitering munitions and counter-drone technologies.
Revenue for the quarter totaled $480 million, according to Chairman, President and Chief Executive Officer Wahid Nawabi. Funded backlog reached a record $1.5 billion, up 37% from the same quarter a year earlier and 23% from the prior quarter. The company recorded $683 million in bookings, producing a quarterly book-to-bill ratio of 1.4 times.
Segment performance and margins
The Autonomous Systems segment generated $346 million of first-quarter revenue, accounting for 72% of total company sales and rising 21% year over year. Within the segment, Precision Strike and Defensive Systems revenue increased 8% to $197 million, supported by loitering munitions, one-way attack systems and Titan counter-UAS RF products.
Uncrewed Aircraft Systems revenue rose 71% year over year to $120 million, led by domestic and international sales of the P550, JUMP 20-X and Puma platforms.
Space, Cyber and Directed Energy revenue was $134 million, down 21% from a year earlier and in line with company expectations. Woodward attributed the decline to the termination of the SCAR contract in March and other discontinued government programs. SCAR-related revenue had totaled $32 million in the prior-year first quarter.
Adjusted gross margin improved to 30% from 29% a year earlier. Adjusted product gross margin rose to 40% from 36%, while adjusted service gross margin declined to 8% from 13%. Woodward said service margins were affected by about $5 million in revenue lost from discontinued programs, other program losses and award delays in the Cyber and Mission Solutions business.
Adjusted EBITDA was $53 million, or 11% of revenue, while non-GAAP adjusted diluted earnings per share rose 84% year over year to $0.59. AeroVironment generated $13 million in operating cash flow, though free cash flow was negative $36 million because of higher capital spending for facility expansions.
Counter-UAS awards drive growth plans
AeroVironment highlighted several recent contract awards across its product portfolio, particularly in counter-UAS systems. The company said it received a nearly $465 million U.S. Army Enduring High Energy Laser, or EHEL, contract for its LOCUST directed-energy system. Nawabi described the award as the first production contract for directed-energy systems in U.S. military history.
The company also announced its first international direct commercial sale for LOCUST. Nawabi said AeroVironment sees domestic and international demand for laser weapon systems as potentially comparable in scale, citing growing drone threats in regions including the Middle East, Asia-Pacific and Eastern Europe.
LOCUST systems can address high-volume drone attacks at a stated cost of less than $10 per shot, according to Nawabi. He said the company expects the product line to have a stronger margin profile in the second half of fiscal 2027 as volumes rise and fixed-price production contracts expand. Over the next several years, management expects the Space, Cyber and Directed Energy segment’s margin profile to move toward levels achieved by the Autonomous Systems segment.
Other counter-UAS developments included a $500 million sole-source IDIQ award for the Titan MS radio-frequency detect-and-defeat platform, including an initial $80 million contract supporting the U.S. Golden Dome initiative. AeroVironment is also expanding its Huntsville, Alabama, operations to support accelerated production of its Freedom Eagle One kinetic intercept solution.
Manufacturing investments and program progress
The company is investing in production capacity across several locations. AeroVironment recently announced a $100 million long-term investment in Southern California to build an innovation center and campus that will consolidate operations, add capacity and is expected to lower annual operating expenses by replacing leased facilities.
A new 120,000-square-foot Salt Lake City facility is expected to open in spring 2027 and will support scaling of loitering munition production. The company is also building out production in Albuquerque, New Mexico, for LOCUST systems and expanding Huntsville for Freedom Eagle One.
Among other first-quarter program developments, AeroVironment received a $117 million award under the U.S. Army’s Long Range Reconnaissance, or LRR, program for its P550 system. Nawabi said the company expects to deliver nearly all of that contract during fiscal 2027 and sees the LRR program as a potential $1 billion opportunity over several years.
The company also received a $30 million contract to provide Puma AE and Puma LE systems for Germany’s Larus reconnaissance program, a $51 million U.S. Army contract for Switchblade 600, and a $43 million contract to integrate Panther phased-array antennas on Sky Range platforms for hypersonic telemetry.
Guidance reaffirmed amid budget-timing uncertainty
AeroVironment reiterated fiscal 2027 revenue guidance of $2.125 billion to $2.225 billion, adjusted EBITDA guidance of $305 million to $325 million, and adjusted EPS guidance of $3.02 to $3.34.
The company expects revenue to be weighted toward the second half of the year, with approximately 45% in the first half and 55% in the second half. It expects roughly one-third of adjusted EBITDA in the first half and two-thirds in the second half, reflecting anticipated volume growth and sales mix improvements later in the year.
Woodward said AeroVironment expects free cash flow to remain negative for fiscal 2027 because capital expenditures are projected at 12% to 14% of revenue. Research and development spending is expected to represent 7% to 9% of revenue.
Nawabi said the timing of congressional approval for the U.S. government’s next fiscal-year budget remains an uncertainty, though management does not currently view it as a significant risk to the company’s outlook. He also said the company expects minimal tariff exposure because more than 98% of its supply chain is domestic, with the remainder sourced primarily from U.S. allies.
About AeroVironment (NASDAQ:AVAV)
AeroVironment, Inc (NASDAQ:AVAV) is a technology company specializing in unmanned aerial systems (UAS), tactical missiles and precision loitering munitions, electric vehicle charging and scalable energy systems. Headquartered in Monrovia, California, the company develops solutions for defense, public safety and commercial markets. Their offerings include small UAS for intelligence, surveillance and reconnaissance, as well as advanced weapons systems designed to meet the needs of modern military operations.
The company’s unmanned aerial systems portfolio features platforms such as the Raven, Puma and Switchblade series, which are deployed by the U.S.
