AeroVironment (NASDAQ:AVAV) Posts Better-Than-Expected Sales In Q2 But Full-Year Sales Guidance Misses Expectations

September 09, 2025 at 16:13 PM EDT

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Aerospace and defense company AeroVironment (NASDAQ: AVAV) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 140% year on year to $454.7 million. On the other hand, the company’s full-year revenue guidance of $1.95 billion at the midpoint came in 2.2% below analysts’ estimates. Its non-GAAP profit of $0.32 per share was 6.7% below analysts’ consensus estimates.

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AeroVironment (AVAV) Q2 CY2025 Highlights:

Revenue: $454.7 million vs analyst estimates of $442.4 million (140% year-on-year growth, 2.8% beat)
Adjusted EPS: $0.32 vs analyst expectations of $0.34 (6.7% miss)
Adjusted EBITDA: $56.56 million vs analyst estimates of $54.71 million (12.4% margin, 3.4% beat)
The company reconfirmed its revenue guidance for the full year of $1.95 billion at the midpoint
Management raised its full-year Adjusted EPS guidance to $3.65 at the midpoint, a 25.9% increase
EBITDA guidance for the full year is $310 million at the midpoint, below analyst estimates of $312.3 million
Operating Margin: -15.2%, down from 12.2% in the same quarter last year
Free Cash Flow was -$146.5 million, down from $22.92 million in the same quarter last year
Market Capitalization: $11.78 billion

Company Overview

Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, AeroVironment grew its sales at an incredible 24.2% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. AeroVironment’s annualized revenue growth of 36.3% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. AeroVironment Year-On-Year Revenue Growth

AeroVironment also breaks out the revenue for its most important segments, Products and Services, which are 69% and 31% of revenue. Over the last two years, AeroVironment’s Products revenue (aircrafts, missile systems, satellites) averaged 44.5% year-on-year growth while its Services revenue (maintenance, training, consulting) averaged 121% growth. AeroVironment Quarterly Revenue by Segment

This quarter, AeroVironment reported magnificent year-on-year revenue growth of 140%, and its $454.7 million of revenue beat Wall Street’s estimates by 2.8%.

Looking ahead, sell-side analysts expect revenue to grow 89.6% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will spur better top-line performance.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

AeroVironment’s high expenses have contributed to an average operating margin of negative 3.5% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out.

Looking at the trend in its profitability, AeroVironment’s operating margin decreased by 9.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. AeroVironment’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

AeroVironment Trailing 12-Month Operating Margin (GAAP)

In Q2, AeroVironment generated a negative 15.2% operating margin.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

AeroVironment’s EPS grew at a remarkable 12.2% compounded annual growth rate over the last five years. However, this performance was lower than its 24.2% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

AeroVironment Trailing 12-Month EPS (Non-GAAP)

Diving into the nuances of AeroVironment’s earnings can give us a better understanding of its performance. As we mentioned earlier, AeroVironment’s operating margin declined by 9.4 percentage points over the last five years. Its share count also grew by 93.8%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. AeroVironment Diluted Shares Outstanding

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For AeroVironment, its two-year annual EPS growth of 7.6% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.

In Q2, AeroVironment reported adjusted EPS of $0.32, down from $0.89 in the same quarter last year. This print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects AeroVironment’s full-year EPS of $2.70 to grow 42.2%.

Key Takeaways from AeroVironment’s Q2 Results

We enjoyed seeing AeroVironment beat analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its EPS missed and its full-year revenue guidance fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 3% to $224 immediately after reporting.

The latest quarter from AeroVironment’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.

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