AeroVironment reported contract awards totaling over $1.2 billion in its latest quarter, the highest level in the company’s history. This influx of new business fueled total revenue growth of 151% year-over-year, with organic expansion accounting for 9% growth when excluding the recent BlueHalo acquisition. Key wins included multi-year Tactical Unmanned Aircraft Systems (TUAS) contracts with U.S. and allied defense agencies, positioning AeroVironment for continued top-line momentum throughout the year.

Despite the revenue surge, adjusted gross margin fell to 27%, down from 42% in the same period last year. Management attributed the decline to elevated procurement costs, rapid ramp-up expenses for new programs and integration of BlueHalo operations. With operating leverage limited by increased R&D spending of $45 million—a 30% increase year-over-year—investors are questioning whether AeroVironment can stabilize margins before year-end.

The company raised full-year revenue guidance to a range of $1.95–$2.0 billion, up from its prior outlook of $1.8–$1.85 billion, reflecting strong backlog conversion. However, non-GAAP EPS forecasts were trimmed to reflect higher cost pressures. Management expects 70% of adjusted EBITDA to be earned in the fourth quarter, highlighting significant seasonality and execution risk. Any delivery delays or cost overruns in the final quarter could materially affect annual profit performance and cash flow generation.