AeroVironment missed EPS estimates by 45% despite revenue more than doubling to $454.7M.
Gross margins collapsed to 20.9% from 43% a year earlier.
A $90.3M depreciation charge drove the swing from $21.2M profit to $67.4M loss.
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Yesterday we were watching whether AeroVironment could sustain its explosive revenue trajectory while returning to profitability. The defense drone maker delivered a sharp earnings miss after the bell on December 3, and this morning the stock is trading around down significantly.
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. The company swung from a $21.2 million profit in Q2 fiscal 2025 to a $67.4 million loss this quarter. 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.
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