AeroVironment Fiscal Q1 2027 Earnings: Revenue Rises as GAAP Loss Narrows

AeroVironment (NASDAQ: AVAV) reported fiscal Q1 2027 revenue of $480.5 million, up 6% from $454.7 million, while its diluted GAAP loss per share narrowed to $0.10 from $1.44. Gross margin improved to 26%, but non-GAAP adjusted EBITDA declined as weaker Space, Cyber and Directed Energy results offset growth in Autonomous Systems.

Core Earnings Data

Revenue increased by $25.8 million, supported by a $15.5 million increase in product sales and a $10.3 million increase in service revenue. Gross profit rose faster than revenue because product margin improved and acquisition-related amortization and other purchase-accounting expenses declined.

GAAP profitability improved substantially, although the comparison benefited from lower non-cash purchase-accounting charges, acquisition expenses and interest costs. On an adjusted basis, EPS increased to $0.59, while adjusted EBITDA decreased by approximately 6% to $53.4 million.

Business and Segment Performance

Autonomous Systems, or AxS, generated all of the company’s net revenue growth. Its $60.6 million increase more than offset a $34.8 million decline in Space, Cyber and Directed Energy, or SCDE.

AxS also increased segment adjusted EBITDA by $9.5 million. SCDE moved from positive adjusted EBITDA to an $8.9 million loss, producing a $12.7 million year-over-year deterioration that weighed on consolidated adjusted EBITDA.

Bookings reached approximately $0.7 billion, producing a quarterly book-to-bill ratio of 1.4. Funded backlog was $1.5 billion at August 1, 2026, up from $1.2 billion at April 30 and 37% higher year over year. Funded backlog represents firm orders for which customer funding has already been appropriated.

Profitability, Cash Flow and the Balance Sheet

Gross margin increased from 21% to 26%, primarily because intangible amortization and other purchase-accounting expenses included in gross profit fell to $18.5 million from $37.4 million. Product gross profit increased by $32.6 million, more than offsetting a $3.2 million decline in service gross profit.

Operating expenses also fell. Selling, general and administrative expense decreased by $19.8 million to $111.5 million, including lower intangible amortization and acquisition-related expenses, partly offset by higher employee costs associated with increased headcount. R&D expense declined by $9.2 million to $24.0 million.

Operating cash flow turned positive at $13.5 million. Collections of accounts receivable contributed $128.3 million, but a $100.3 million inventory build and a $68.0 million increase in unbilled receivables and retentions absorbed cash. Capital expenditures rose to $44.0 million from $22.7 million, meaning quarterly operating cash flow did not cover property and equipment investment.

At quarter-end, AeroVironment held $278.4 million in cash, $301.8 million in short-term investments and $94.8 million in long-term investments. Long-term debt was $730.1 million. Inventory increased to $410.8 million from $312.9 million at the end of fiscal 2026, while unbilled receivables and retentions rose to $637.8 million from $570.4 million.

Lower Acquisition Charges Lift GAAP Results, but SCDE Weighs on Adjusted Profitability

AeroVironment’s sharply narrower GAAP loss did not reflect an equivalent improvement in consolidated adjusted EBITDA. Total intangible amortization and related non-cash purchase-accounting expenses fell to $43.4 million from $79.7 million, while acquisition-related expenses included in the adjusted EBITDA reconciliation declined to $2.1 million from $23.7 million.

Financing costs also improved. The company recorded $4.1 million of net interest income, compared with $17.4 million of net interest expense a year earlier, after term and revolving loans associated with the BlueHalo acquisition were settled using proceeds from convertible notes and equity issued in July 2025.

These changes explain much of the improvement in GAAP operating and net results. By contrast, adjusted EBITDA declined by $3.2 million because the SCDE segment’s earnings deterioration outweighed AxS growth.

Fiscal 2027 Guidance

AeroVironment reaffirmed its full-year fiscal 2027 outlook. The unchanged ranges call for higher full-year adjusted EBITDA than the $287 million reported for fiscal 2026, while GAAP and non-GAAP EPS remain separated by substantial forecast acquisition-accounting adjustments.

The guidance applies to the fiscal year ending April 30, 2027. The non-GAAP EPS outlook excludes acquired intangible amortization, purchase-accounting adjustments, acquisition expenses and specified investment activity.

Management Commentary

Chairman, President and CEO Wahid Nawabi emphasized record first-quarter revenue and funded backlog, as well as demand for the company’s major franchise programs. Management said customers are deploying autonomous capabilities at increasing scale.

The company’s operational priorities are expanding manufacturing capacity across its sites and strengthening its supply chain. Execution in those areas will influence how quickly AeroVironment can convert its funded backlog into delivered products and revenue.

Recent Insider Transactions

Reported insider activity for the preceding six months included 115,040 shares classified as purchases across 23 transactions and 2,599 shares sold across 10 transactions, resulting in net reported purchases of 112,441 shares. Many of the recent entries were stock awards rather than open-market purchases, so the aggregate purchase figure should not be interpreted as direct insider buying without that distinction.

The reported transactions establish the type and size of recent insider activity but do not, by themselves, indicate insiders’ views of the company’s outlook.

Risks Investors Need to Watch

• SCDE weakness: The segment’s revenue fell approximately 21%, and adjusted EBITDA moved from a $3.8 million profit to an $8.9 million loss. Continued weakness could offset further AxS growth.
• Working-capital demands: Higher inventory and unbilled receivables consumed substantial cash during the quarter. Further expansion could limit cash conversion even if reported revenue grows.
• Capacity and supply-chain execution: Management is expanding manufacturing capacity and strengthening suppliers to meet demand. Delays could affect backlog conversion and contract delivery timing.
• Government funding and contract timing: AeroVironment depends heavily on funded government programs. Changes in procurement priorities, appropriations or contract timing could affect revenue and backlog realization.
• Acquisition-accounting burden: Amortization and purchase-accounting charges declined but remained material at $43.4 million, maintaining a wide gap between GAAP and non-GAAP profitability.

Summary

AeroVironment’s fiscal Q1 2027 combined modest revenue growth with a significantly narrower GAAP loss, helped by lower acquisition-accounting charges, reduced acquisition expenses and improved interest results. AxS delivered higher revenue and segment earnings, but SCDE’s contraction pushed consolidated adjusted EBITDA below the prior-year level. The main issues to monitor are SCDE performance, conversion of the $1.5 billion funded backlog and the cash demands created by inventory, unbilled receivables and capacity expansion.