0001558370-25-011973
SEC filingRevenue surged 140% YoY to $454.7M driven by BlueHalo acquisition, but gross margin collapsed from 43% to 21%, leading to net loss of $67.4M.
For the three months ended August 2, 2025, revenue skyrocketed 140% to $454.7 million from $189.5 million in the prior year quarter, primarily driven by the May 2025 acquisition of BlueHalo, which contributed $123.7 million in product revenue and $111.5 million in service revenue. Legacy AeroVironment (AV) product revenue increased $30.3 million due to higher Switchblade demand from global conflicts and U.S. DoD resupply, partially offset by a decline in SUAS international sales. Service revenue from legacy AV was flat as a decrease in training and repairs was offset by growth in customer-funded R&D.
Cost of sales jumped 233% to $359.6 million, outpacing revenue growth, causing gross margin to plunge from 43.0% to 20.9%. The margin compression stemmed from $37.4 million in intangible amortization and other non-cash purchase accounting expenses from BlueHalo (vs. $3.7 million a year ago), along with a mix shift toward lower-margin products, particularly increased Switchblade production.
Operating income swung to a loss of $69.3 million from a profit of $23.1 million, as SG&A ballooned to $131.3 million (29% of revenue) from $33.8 million (18% of revenue), driven by $41.2 million in intangible amortization, $23.7 million in acquisition-related expenses, and $14.7 million in employee costs from headcount growth. R&D expense rose to $33.1 million (7% of revenue) from $24.6 million (13% of revenue), mainly from BlueHalo.
Net loss totaled $67.4 million versus net income of $21.2 million a year ago, with additional pressure from $17.4 million in net interest expense (including $6.7 million in accelerated debt issuance costs) and a $15.2 million income tax benefit (effective rate 18.0% vs. 6.6% last year).
Autonomous Systems (AxS): Revenue increased 51% to $285.3 million, with product revenue up $81.2 million and service revenue up $14.6 million. Segment adjusted EBITDA rose 42% to $52.8 million (margin 18.5%), driven by the revenue growth but partially offset by higher costs: $37 million from BlueHalo product lines, $16 million from unfavorable mix, and $16 million from volume. Legacy AV contributed $30.3 million product growth from LMS demand.
Space, Cyber and Directed Energy (SCDE): This new segment, formed from BlueHalo, reported $169.4 million revenue and $3.8 million segment adjusted EBITDA (margin 2.2%). The low margin reflects early integration costs and amortization.
Management expects R&D spending to remain 7-8% of revenue. The service revenue proportion is expected to stay elevated following the BlueHalo acquisition. Cash taxes will be significantly reduced for fiscal 2026 due to the OBBBA R&D deduction rule. The company believes existing cash, operating cash flow, and credit facilities ($338.1 million available) are sufficient for the next twelve months. Key uncertainties include contract timing and defense spending levels.
Cash and cash equivalents ballooned to $685.8M as of August 2, 2025, versus $40.9M at April 30, 2025, primarily driven by $968.5M in net proceeds from a common stock issuance and $726.9M from the issuance of 0% convertible senior notes. The balance sheet also reflects the acquisition of BlueHalo, with goodwill of $2,539.6M and net intangible assets of $1,118.8M. Total assets increased from $1,120.6M to $5,624.0M. Long-term debt, net of unamortized issuance costs, stood at $725.7M, composed entirely of the convertible notes (principal $747.5M). The revolving credit facility was fully repaid and remains available ($338.1M available). The current deferred tax position shifted from a net asset of $61.5M to a net liability of $101.0M, likely due to the BlueHalo acquisition.
The Company reported $1,066.4M in remaining performance obligations (funded backlog), of which 80% is expected to be recognized in fiscal 2026. Lease liabilities totaled $104.0M in present value ($132.7M undiscounted). The only disclosed capital commitment was $5.5M for a limited partnership fund, expected to be called over the next two years. No other purchase commitments (e.g., supply agreements, inventory obligations) were detailed in the notes.
No share repurchases or dividends were declared or paid in the period. The company fully repaid the $700.0M term loan drawn for the BlueHalo acquisition with proceeds from the convertible note and stock issuance. Capital expenditures for the quarter were $32.1M (including $9.3M for capitalized software), representing 7.0% of revenue. The company also issued 4.06 million shares of common stock in July 2025, generating net proceeds of $966.8M after costs, and $747.5M in convertible zero-coupon notes.
Revenue was split between two segments: AxS ($285.3M, +50.5% YoY) and the new SCDE segment ($169.4M, all from BlueHalo). Segment adjusted EBITDA was $52.8M (AxS) and $3.8M (SCDE). By contract type, Firm Fixed Price comprised $299.0M (66%), Cost Plus $118.9M (26%), and T&M $36.8M (8%). U.S. government customers provided $395.3M (87% of total). Domestic revenue was $347.1M (76%), while international was $107.5M (24%). Revenue recognized over time accounted for 75% of total versus 41% in the prior-year quarter.