ARLINGTON, Virginia, March 10, 2026, 17:22 EDT
AeroVironment slashed its full-year revenue and adjusted earnings guidance Tuesday, following word from the U.S. government that it plans to terminate the BADGER agreement linked to the Space Force’s Satellite Communications Augmentation Resource (SCAR) program. The company will still be eligible to bid on future contracts. Shares dropped in after-hours trading after the revenue miss and news of the contract loss landed.
The shortfall stands out—analysts were looking for a big rebound, with previews suggesting sales would jump around 185% from last year. SCAR was in focus as the key variable for the stock. Wall Street’s numbers: about 68 cents per share, revenue close to $476 million.
The about-face came fast. Just last week, AeroVironment was publicly discussing ongoing talks with the Space Force about SCAR. By Tuesday, a slide deck from the company revealed that an estimated $1.493 billion in SCAR-linked options sitting in unfunded backlog are now off the table.
AeroVironment reported $408 million in revenue for its fiscal third quarter ended Jan. 31, a jump of 143% from the prior year, thanks in part to the BlueHalo acquisition. Still, a hefty $151.3 million goodwill impairment—a non-cash write-down tied to acquisition value—dragged the company to a net loss of $156.6 million, or $3.15 per share.
Adjusted earnings landed at 64 cents per share. For fiscal 2026, the company projects revenue between $1.85 billion and $1.95 billion, and expects adjusted earnings ranging from $2.75 to $3.10 a share. That puts the midpoint of revenue guidance roughly 3.2% under what analysts had penciled in, with the earnings midpoint—$2.93—coming in short of the $3.31 consensus.
Chief Executive Wahid Nawabi said “demand for our unique solutions remains robust,” though he flagged some timing headwinds in the Space segment. Still, Nawabi highlighted a solid stream of orders, with $2.1 billion in bookings over the first nine months of the fiscal year and a record $1.1 billion funded backlog—work that’s already secured with appropriated funds. Business Wire
AeroVironment operates in a crowded U.S. military drone sector, competing with private outfits like Anduril and Shield AI, as well as smaller public player Red Cat. Demand across the industry has picked up, driven by lessons out of Ukraine and a renewed Pentagon focus on acquiring more unmanned tech. Back in November, the U.S. Army outlined a plan to purchase at least 1 million drones over the next two to three years.
But the hit to margins stands out. Gross margin dropped to 24%, down sharply from 38% last year. The company pointed to ongoing SCAR uncertainty, which could continue to pressure Space unit revenue—even if AeroVironment eventually gets back in the running. After the recent forecast revision, there’s little tolerance left for another setback.
AVAV finished down 2.6% at $221.57 ahead of its earnings announcement. Still, the stock was up roughly 80% for the year leading into Tuesday’s drop—underscoring just how much enthusiasm traders had baked into the drone-demand theme.
