Abstract

AeroVironment will report fiscal Q2 results on December 09, 2025 Post Market; this preview summarizes consensus and company projections for revenue, margins, net income, and adjusted EPS, and frames the quarter’s key debate around execution on funded backlog, product mix, and operating leverage.

Market Forecast

For the fiscal Q2 period, market expectations point to revenue of USD 468.48 million with an estimated adjusted EPS of USD 0.78 and EBIT of USD -31.32 million, implying a year-over-year revenue growth of 156.09% and adjusted EPS growth of 8.87%. The company’s outlook frames continued delivery momentum across products and contract services, with attention on mix and cost absorption that will influence gross margin and net margin; year-over-year comparisons suggest margin variability despite higher scale. Main business momentum centers on Products and Contract Services execution against funded awards. The most promising segment is Products, with prior-quarter revenue of USD 313.53 million and commanding the larger share of total sales; YoY growth data for subsegments was not disclosed.

Last Quarter Review

In the previous quarter, AeroVironment reported revenue of USD 454.68 million, a gross profit margin of 20.92%, GAAP net profit attributable to the parent company of USD -67.37 million, a net profit margin of -14.82%, and adjusted EPS of USD 0.32, with revenue growing 139.96% year over year and EPS down 64.05% year over year. A notable development was the quarter-on-quarter swing in profitability, with net income down 504.28% versus the prior quarter, indicating elevated one-time items or mix headwinds. Main business highlights showed Products at USD 313.53 million and Contract Services at USD 141.14 million; YoY growth by segment was not disclosed.

Current Quarter Outlook (with major analytical insights)

Main business: delivery cadence, mix, and cost absorption

AeroVironment’s core operations reflect two revenue streams: Products and Contract Services. The fiscal Q2 setup assumes continued throughput against a strong funded order environment, which supports the revenue estimate of USD 468.48 million. As volume scales, factory utilization and supply-chain normalization can help unit economics; however, the prior quarter’s gross margin of 20.92% shows that mix shifts and cost absorption remain critical levers. If higher-margin product shipments underperform mix expectations or if fixed-cost absorption lags delivery timing, gross margin could track near the recent level, constraining net margin recovery even with higher sales. Pricing on long-cycle awards is typically set at award, and inflation pass-through may be uneven across contracts. This heightens sensitivity to production efficiency and logistics costs in the quarter. Management’s execution on timely deliveries and services milestones will influence working capital and EBIT trajectory, where the market currently models an EBIT loss of USD 31.32 million despite strong top-line growth. This disconnect flags the possibility that heavy program investment and near-term cost recognition may compress near-term profitability while laying groundwork for later periods.

Most promising business: Products scale and shipment timing

Products contributed USD 313.53 million last quarter and accounts for approximately 68.96% of total revenue, positioning it as the key swing factor for quarterly earnings. The company’s ability to convert backlog into shipments in fiscal Q2 will drive revenue recognition and support adjusted EPS toward the USD 0.78 estimate. Products performance is sensitive to delivery phasing within the quarter; if the cadence skews late, gross profit capture could be delayed and operating costs frontloaded, increasing the risk to quarterly EBIT and EPS. Supply-chain health and component availability, while improved industry-wide, can still create batch timing effects that ripple through margin realization. If higher-value configurations dominate shipments, gross margin could see incremental uplift; conversely, if delivery mix tilts to lower-margin variants or service-heavy bundles, margin could remain closer to the previous quarter’s 20.92%. Execution on quality and acceptance criteria is another determinant, as rework or acceptance delays can elevate period expenses and pressure EBIT.

Stock-price drivers this quarter: margin visibility and earnings quality

Investor attention is set to converge on the reconciliation between robust revenue growth and negative modeled EBIT. The dispersion here suggests skepticism around gross margin uplift and the potential for elevated operating expenses, including R&D, program costs, or one-time items. Clarity on the drivers behind last quarter’s -14.82% net margin and the -504.28% sequential swing in net profit will be central for the equity narrative in fiscal Q2. Earnings quality will also be scrutinized. If working capital stabilizes and cash conversion improves alongside deliveries, investors may look through near-term EBIT pressure. Conversely, if the quarter features substantial non-recurring charges or heavy accruals, the path to sustained margin improvement may be questioned. Guidance around second-half fiscal year bookings, delivery timing, and any updates to program costs will likely dictate post-earnings share reaction.

Analyst Opinions

Across recent commentary, the majority view leans bullish, citing strong funded demand and expectations for continued top-line expansion supported by backlog conversion. Analysts emphasize that while near-term EBIT is modeled negative, the scale trajectory and the Products segment’s contribution of USD 313.53 million last quarter support a constructive stance on revenue durability. The bullish camp argues that as supply normalization progresses and production efficiency improves, gross margin has room to expand from the 20.92% level, aiding EPS stabilization around the USD 0.78 estimate for the quarter. Prominent research voices highlight the gap between revenue growth of 156.09% year over year and EBIT expectations of USD -31.32 million, framing it as a temporary investment phase tied to program execution rather than a structural profitability issue. They also point to Contract Services at USD 141.14 million as a steady contributor that underpins visibility, even if mix caps margin upside near term. The consensus bullish narrative expects AeroVironment to enter the next fiscal periods with improved operating leverage as larger awards mature, reducing per-unit costs and supporting gross margin progression.