The Company Shaping the Battlefield of Tomorrow

AeroVironment (NASDAQ: AVAV), a leading provider of unmanned systems and advanced tactical weapons, concluded fiscal year 2025 with exceptional results across all major financial and strategic metrics. Alongside robust revenue growth, the company announced a strategic acquisition that positions it to expand its product offerings and customer reach, while issuing a bold forecast for fiscal 2026. As geopolitical tensions and global defense budgets continue to rise, AeroVironment appears poised to play an even greater role in the modernization of Western militaries.

Quantitative Performance: Record Revenue and Margins

For the full year FY25, AeroVironment reported revenue of $717.2 million, marking a 41% increase year-over-year. The company’s gross margin improved significantly to 39%, compared to 36% in FY24. Adjusted EBITDA surged to $158 million, reflecting a margin of 22%—well above the company’s historical average.

The company also ended the year with a record backlog of $539.5 million, up from $414.1 million at the end of FY24, driven by sustained demand for loitering munitions, unmanned aircraft systems (UAS), and data-link technologies. Net income for the year rose to $79.3 million, nearly tripling the previous year’s figure of $27.7 million.

Quarterly Highlights: Momentum Accelerates in Q4

In Q4 FY25 alone, AeroVironment posted revenue of $196.4 million—up 53% from the $128.0 million recorded in Q4 FY24. This quarterly surge was attributed to increased deliveries of tactical missile systems and higher demand from U.S. Department of Defense customers. The quarterly adjusted EBITDA came in at $45.6 million, representing a 23.2% margin, and quarterly net income was $25.5 million, more than doubling the previous year’s $10.9 million.

Strategic Acquisition: Tomahawk Robotics Joins the Fold

One of the most notable developments during the year was AeroVironment’s acquisition of Tomahawk Robotics for $120 million. The deal, completed in August 2024, significantly enhances the company’s capabilities in artificial intelligence-driven command and control. Tomahawk’s AI software is already used across multiple U.S. military programs and allows warfighters to operate drones and robotic platforms from a single interface.

This acquisition aligns with AeroVironment’s strategic vision of offering integrated battlefield solutions that combine autonomy, intelligence, and adaptability. The company emphasized that Tomahawk’s software will be integrated across its product lines, including Switchblade tactical missile systems and Puma UAS.

Business Segments: Growth Across the Board

AeroVironment’s revenue growth was broad-based. Its Tactical Missile Systems (TMS) segment—featuring the high-demand Switchblade 300 and 600—was the largest contributor, growing 68% year-over-year. The Unmanned Aircraft Systems (UAS) segment grew 31%, supported by strong international orders and increased operational tempo in NATO countries.

The Medium UAS segment, which includes the Jump 20 platform acquired from Arcturus UAV in 2021, recorded a more modest 15% growth, yet remains a key enabler for future expansion in intelligence, surveillance, and reconnaissance (ISR) missions.

Divergence Between Demand and Production

While AeroVironment continues to enjoy record demand, the company acknowledged production constraints due to labor shortages and component delays. These challenges, however, are gradually being resolved, and management expects improved throughput in FY26.

CEO Wahid Nawabi stated in the earnings call that the company is “working closely with suppliers and the U.S. government to expand capacity and reduce lead times,” noting that several new contracts require ramped-up output starting in Q2 FY26.

Outlook for FY26: Confidence in Continued Growth

AeroVironment issued a strong forecast for FY26, expecting revenues to fall between $770 million and $800 million—representing 8% to 12% growth over FY25. Adjusted EBITDA is projected to be between $165 million and $175 million, with a targeted margin of at least 21%.

This forecast is supported by continued momentum in international orders, growing demand for advanced loitering munitions, and expanded government funding for unmanned capabilities. The company also expects additional contributions from Tomahawk Robotics, which is expected to add $30–$35 million in revenue in its first full year under AeroVironment.

Strategic Perspective: Positioned at the Crossroads of AI and Defense

AeroVironment’s positioning is uniquely advantageous as military doctrine shifts toward autonomy, speed, and precision. The convergence of AI, robotics, and battlefield data fusion makes AeroVironment a key supplier for next-generation military operations.

Unlike traditional defense contractors reliant on large manned systems, AeroVironment’s lean, mobile, and affordable platforms offer a compelling alternative for militaries operating under budgetary constraints. The war in Ukraine has only underscored the growing importance of tactical drones and loitering munitions, areas in which AeroVironment has clear leadership.

Geopolitical Tailwinds: NATO and Beyond

Rising defense budgets across NATO and Asia-Pacific are expected to fuel continued growth. The company highlighted strong interest from countries like Germany, Poland, Japan, and Australia. With over $539 million in backlog and a robust opportunity pipeline, AeroVironment has high visibility heading into 2026.

Additionally, U.S. defense policy continues to prioritize rapid deployment and distributed operations, increasing the relevance of AeroVironment’s solutions.

Conclusion: A Defense Innovator with Room to Run

With strong financial momentum, a differentiated product portfolio, and a clear strategic vision, AeroVironment is well positioned to benefit from structural shifts in defense spending. The integration of AI capabilities from Tomahawk Robotics and continued demand for unmanned systems place the company at the heart of future military modernization.

The challenges around production capacity remain, but AeroVironment’s management appears confident in overcoming them. FY26 could mark another year of record performance as the company scales to meet growing global demand.