AeroVironment, Inc. (NASDAQ:AVAV) stock fell 6.84% (As on March 11, 11:19:51 AM UTC-4, Source: Google Finance) after the company reported third quarter results that fell short of analyst expectations and reduced full-year guidance. The company’s Space business faced challenges during the quarter, including a stop-work order received in January 2026 on its contract for BADGER phased array antenna systems supporting the Space Force’s SCAR program. This development triggered a goodwill impairment charge of $151.3 million in the Space reporting unit. Funded backlog reached a record $1.1 billion as of January 31, 2026, up from $726.6 million at the end of fiscal 2025. The company reported bookings of $2.1 billion for the first nine months with a book-to-bill ratio of 1.6. Loss from operations for the third quarter of fiscal 2026 was $(179.0) million as compared to $(3.1) million for the third quarter of last fiscal year. Net loss for the third quarter of fiscal 2026 was $(156.6) million, or $(3.15) per diluted share, as compared to $(1.8) million, or $(0.06) per diluted share, in the prior-year period, respectively.

Moreover, from a segment standpoint, Autonomous Systems (“AxS”) recorded revenue of $278.7 million and Space, Cyber and Directed Energy (“SCDE”) recorded revenue of $129.3 million. Gross margin for the third quarter of fiscal 2026 was $98.8 million, an increase of 56% as compared to $63.2 million for the third quarter of fiscal 2025, reflecting higher product margin of $19.1 million and higher service margin of $16.5 million. As a percentage of revenue, gross margin fell to 24% from 38%, primarily due to an increase in the proportion of service revenue resulting from the BlueHalo acquisition and the increased amortization and other non-cash purchase accounting expenses.

AVAV in the third quarter of FY26 has reported the adjusted earnings per share of 64 cents, missing the analysts’ estimates for the adjusted earnings per share of 72 cents. The company had reported the adjusted revenue growth of 143 percent to $408 million in the third quarter of FY26, missing the analysts’ estimates for revenue of $483.87 million. This is due to higher product sales of $138.1 million and higher service revenue of $102.3 million. The BlueHalo acquisition, which closed on May 1, 2025, contributed $176.5 million to the quarter’s revenue.

For fiscal year 2026, AeroVironment lowered its guidance, projecting revenue of $1.85 billion to $1.95 billion, below the consensus estimate of $1.963 billion. The midpoint of $1.90 billion falls short of analyst expectations. The company expects adjusted EPS of $2.75 to $3.10, with the midpoint of $2.93 trailing the consensus of $3.31.