AeroVironment Posts Record Revenue but Swings to $67 Million Loss on Integration Costs

"AeroVironment reported Q2 fiscal 2026 earnings per share of $0.44, missing the $0.80 estimate by 45%. This marks the third miss in four quarters and the worst surprise percentage since January 2025. Revenue performance wasn't the issue. The company more than doubled year-over-year sales to $454.7 million, representing 140% growth. The problem was profitability. Gross margins collapsed to 20.9% from 43% in the prior-year quarter, as cost of goods sold surged to 79% of revenue."

"An extraordinary $90.3 million depreciation and amortization charge, up from typical quarterly levels of $8 million to $14 million, drove much of the damage. This spike suggests significant acquisition integration costs or asset adjustments. Interest expense also jumped to $17.4 million from just $1 million the prior quarter, pointing to new debt or acquisition financing. Operating losses reached $69.3 million despite the revenue surge."

"The initial after-hours reaction was severe. Shares dropped from around $284 to $251 within minutes of the release, erasing roughly $1.6 billion in market value. The 8-K filing released December 9 should contain critical guidance updates and management commentary on margin recovery. Investors need clarity on whether the margin compression reflects temporary integration costs or a structural shift toward lower-margin government contracts. We'll update if analyst revisions or management statements provide material new context as the session progresses."

AeroVironment reported Q2 fiscal 2026 EPS of $0.44, missing estimates by 45% and marking the third miss in four quarters. Revenue more than doubled year-over-year to $454.7 million, a 140% increase, while gross margins fell to 20.9% from 43% as cost of goods sold rose to 79% of revenue. The company swung from a $21.2 million profit a year earlier to a $67.4 million loss, driven largely by an extraordinary $90.3 million depreciation and amortization charge and higher interest expense of $17.4 million. Shares plunged after-hours, wiping out approximately $1.6 billion in market value. The December 9 8-K should clarify whether margin compression is temporary integration cost or structural change.

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