Sometimes in business, it's not about the demand, it's about the timing. Drone maker AeroVironment Inc. (AVAV) learned that lesson the hard way this quarter, with shares dropping after reporting results that missed Wall Street's targets on both the top and bottom lines.
The numbers tell the story: the company reported earnings of 64 cents per share, coming in shy of the 69 cents analysts were expecting. Revenue was $408.05 million, which missed the consensus estimate of $475.63 million by a notable 14.21%.
So what happened? According to CEO Wahid Nawabi, it was a matter of when, not if. "While our third quarter results were impacted by revenue timing and adjustments in our Space business, demand for our unique solutions remains robust," Nawabi said.
And to be fair, if you look beyond the quarterly headline numbers, there are some pretty strong signals. The company booked $2.1 billion in new business during the first nine months of its fiscal year, resulting in a book-to-bill ratio of 1.6. For those keeping score at home, that means for every dollar of revenue they recognized, they booked $1.60 in new orders. That's the kind of math investors usually like.
The funded backlog—that's orders they've actually been paid for—grew to $1.1 billion as of January 31, 2026, up from $726.6 million at the end of April 2025. Nawabi seems confident this sets up a strong finish: "Strong order flow and growth in funded backlog during the quarter are setting the stage for record fourth quarter revenue and a solid start to fiscal year 2027."
Despite that optimism, the company decided to reset expectations for the full year. They lowered their adjusted EPS guidance to a range of $2.75 to $3.10, below the analyst estimate of $3.31. Revenue guidance was also trimmed to $1.85 billion to $1.95 billion, versus the Street's expectation of $1.97 billion.
Investors reacted by sending the stock down 8.38% to $203.01 in after-hours trading. It's a classic market move: punish the miss and the guide-down now, and maybe reward the backlog growth later. For AeroVironment, the next quarter will be about proving that the timing issues are truly behind them and that the robust demand they talk about translates into the numbers everyone is watching.
