AeroVironment Reports 10% Revenue Decline and Net Loss in Latest Quarter

AeroVironment, Inc. reported a decline in financial performance for the three months ended January 25, 2025, with total revenue of $167.6 million, down 10% from $186.6 million in the same period last year. The decrease was attributed to a significant drop in product sales, particularly in the Uncrewed Systems (UxS) segment, which saw a reduction of $46.7 million in international sales, notably to Ukraine. In contrast, the Loitering Munitions Systems (LMS) segment experienced a revenue increase of 45%, driven by heightened demand for its products amid ongoing global conflicts. The company reported a net loss of $1.8 million for the quarter, compared to a net income of $13.9 million in the prior year.

For the nine months ending January 25, 2025, AeroVironment's revenue increased by 5% to $545.6 million, compared to $519.7 million in the same period last year. This growth was primarily fueled by a $98.7 million increase in product sales, particularly from the LMS segment, which benefited from U.S. Department of Defense resupply efforts. However, service revenue decreased by $3.5 million, reflecting a slowdown in customer-funded research and development activities. The company reported net income of $27.0 million for the nine-month period, down from $53.6 million in the previous year.

Strategically, AeroVironment completed the acquisition of Tomahawk Robotics on September 15, 2023, for a total purchase price of $134.4 million, which included both stock and cash components. This acquisition is expected to enhance the company's capabilities in AI-enabled robotic control systems and improve interoperability across its product lines. Additionally, the company has announced plans to acquire BlueHalo in an all-stock transaction, which is anticipated to further expand its market presence and technological offerings.

Operationally, AeroVironment's funded backlog as of January 25, 2025, stood at approximately $763.5 million, a significant increase from $400.2 million as of April 30, 2024. This backlog includes contracts impacted by a recent stop-work order from the Department of the Army, which affected about $13 million in funded backlog. The company also reported an increase in employee headcount, reflecting its growth strategy and expansion efforts. However, cash flow from operating activities turned negative, with a net cash outflow of $1.1 million for the nine months ended January 25, 2025, compared to a positive cash flow of $27.0 million in the prior year.

Looking ahead, AeroVironment anticipates continued growth in its LMS segment, driven by ongoing global demand and U.S. military resupply efforts. However, the company remains cautious about potential impacts from market conditions and operational challenges, including the recent stop-work order. The management expects to leverage its existing cash reserves and credit facilities to support ongoing operations and strategic initiatives, including the integration of Tomahawk and the upcoming BlueHalo acquisition.