What changed in this filing

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Item 1. Financial Statements

2025-12-10 compared with 2025-09-10 · 201 added, 103 removed, 588 unchanged (34% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses of $ 773 at August 2, 2025 and $ 203 at April 30, 2025

Short-term investments

Accounts receivable, net of allowance for credit losses of $ 2,601 at November 1, 2025 and $ 203 at April 30, 2025

Unbilled receivables and retentions

26 unchanged sentences

Authorized shares— 10,000,000 ;

none issued or outstanding at August 2, 2025 and April 30,2025

none issued or outstanding at November 1, 2025 and April 30,2025

Common stock, $ 0.0001 par value:

Authorized shares— 100,000,000

Issued and outstanding shares— 49,932,300 shares at August 2, 2025 and 28,267,517 shares at April 30, 2025

Issued and outstanding shares— 49,927,306 shares at November 1, 2025 and 28,267,517 shares at April 30, 2025

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Product sales

9 unchanged sentences

(Loss) income from operations

Other (loss) income:

Interest expense, net

Other income (loss):

Interest income (expense), net

Other income (expense), net

10 unchanged sentences

Three Months Ended

Six Months Ended

Net (loss) income

Other comprehensive income:

Unrealized loss on available-for-sale investments, net of deferred tax expense of $ 0 for the three and six months ended November 1, 2025 and October 26, 2024, respectively

Change in foreign currency translation adjustments

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended August 2, 2025 and July 27, 2024 (Unaudited)

For the three months ended November 1, 2025 and October 26, 2024 (Unaudited)

(In thousands except share data)

Comprehensive

Balance at August 2, 2025

Unrealized loss on investments

Foreign currency translation

Restricted stock awards

Restricted stock awards forfeited

Tax withholding payment related to net share settlement of equity awards

Stock based compensation

Balance at November 1, 2025

Comprehensive

Balance at July 27, 2024

Foreign currency translation

Restricted stock awards

Restricted stock awards forfeited

Tax withholding payment related to net share settlement of equity awards

Stock based compensation

Balance at October 26, 2024

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the six months ended November 1, 2025 and October 26, 2024 (Unaudited)

(In thousands except share data)

Comprehensive

Balance at April 30, 2025

Unrealized loss on investments

Foreign currency translation

3 unchanged sentences

Tax withholding payment related to net share settlement of equity awards

Issuance of common stock for business acquisition

Issuance of common stock for business acquisition, net of issuance costs

Shares issued, net of issuance costs

Stock based compensation

Balance at August 2, 2025

Balance at November 1, 2025

Comprehensive

6 unchanged sentences

Stock based compensation

Balance at July 27, 2024

Balance at October 26, 2024

AeroVironment, Inc.

1 unchanged sentence

(In thousands)

Three Months Ended

Six Months Ended

Operating activities

10 unchanged sentences

Unrealized (gain) loss on available-for-sale equity securities, net

Deferred income taxes

Stock-based compensation

Loss on disposal of property and equipment

Amortization of debt securities

Changes in operating assets and liabilities, net of acquisitions:

9 unchanged sentences

Contributions in equity method investments

Purchase of available-for-sale investments

Acquisition of capitalized software to be sold

1 unchanged sentence

Net cash used in investing activities

( 1,157,721 )

Financing activities

Principal payments of term loan

Proceeds from term loan

Proceeds from long-term debt

Principal payments of revolver

9 unchanged sentences

Effects of currency translation on cash and cash equivalents

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

4 unchanged sentences

Issuance of common stock for business acquisition

Unrealized loss on available-for-sale investments, net of deferred tax expense of $ 0 for the three and six months ended November 1, 2025 and October 26, 2024, respectively

Change in foreign currency translation adjustments

12 unchanged sentences

The Company’s reportable segments are as follows:

Autonomous Systems (“AxS”) — The AxS segment focuses on the design, development, production, delivery, and support of intelligent, multi-domain robotic systems, including uncrewed aircraft systems (“UAS”) and ground robot systems.

The segment includes the Company’s former Uncrewed Systems, Loitering Munitions Systems, and MacCready Works segments as well as Radio Frequency (“RF”) and Kinetic Counter-UAS (“C-UAS”), Electronic Warfare Systems (“EW”) and Unmanned Maritime products and services from the BlueHalo acquisition.

1 unchanged sentence

Department of Defense (“DoD”), other federal agencies, and international allied governments.

This segment encompasses the Company’s core autonomous platforms, such as drones and robotic systems, tailored for mission-critical applications across air and ground domains.

This segment encompasses the Company’s core autonomous platforms, such as drones and robotic systems, tailored for mission-critical applications across air, land and sea domains.

Space, Cyber, and Directed Energy (“SCDE”) — The SCDE segment focuses on advanced technologies in the space domain providing space-based and ground-based platforms, cyber capabilities, and directed energy systems.

1 unchanged sentence

It also primarily serves organizations within or supplying the U.S.

Department of Defense (“DoD”), other federal agencies, and international allied governments.

DoD, other federal agencies, and international allied governments.

Basis of Presentation

4 unchanged sentences

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included.

The results of operations for the three months ended August 2, 2025 are not necessarily indicative of the results for the full year ending April 30, 2026.

The results of operations for the three and six months ended November 1, 2025 are not necessarily indicative of the results for the full year ending April 30, 2026.

For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2025, included in the Company’s Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process, that affect the reported amounts in the unaudited condensed consolidated financial statements and accompanying notes.

GAAP requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process,

that affect the reported amounts in the unaudited condensed consolidated financial statements and accompanying notes.

Actual results could differ from those estimates.

5 unchanged sentences

Recently Adopted Accounting Standards

The Company did not adopt any accounting standards during the three months ended August 2, 2025.

The Company did not adopt any accounting standards during the three and six months ended November 1, 2025.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Specifically, the Company’s revenue disclosure of revenue by segment and the segment disclosures for prior periods have been recast to conform to the new segments and new measure of profitability.

Specifically, the Company’s revenue disclosure of revenue by segment and the segment disclosures for prior periods have been recast to conform to the new segments and new measure of segment profitability.

Revenue Recognition

The Company’s revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products and to provide related engineering, technical and other services according to the specifications of its customers.

These contracts may be firm fixed price (“FFP”), cost plus award fee, and cost plus incentive fee (collectively “Cost Plus”), or time and materials (“T&M”).

These contracts may be firm fixed price (“FFP”), cost plus fixed fee, cost plus award fee, and cost plus incentive fee (collectively “Cost Plus”), or time and materials (“T&M”).

The Company considers all such contracts to be within the scope of ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”).

Performance Obligations

On August 2, 2025, the Company had approximately $ 1,066,423,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

On November 1, 2025, the Company had approximately $ 1,092,479,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

The Company currently expects to recognize approximately 68 % of the remaining performance obligations as revenue in fiscal 2026 and the remaining 32 % in fiscal 2027 or beyond.

2 unchanged sentences

Three Months Ended

Six Months Ended

Revenue by segment

1 unchanged sentence

Three Months Ended

Six Months Ended

Revenue by contract type

7 unchanged sentences

Three Months Ended

Six Months Ended

Revenue by customer category

1 unchanged sentence

Three Months Ended

Six Months Ended

Revenue by geographic location

2 unchanged sentences

Three Months Ended

Six Months Ended

Revenue percentage by recognition method

2 unchanged sentences

Contract Balances

Changes in the contract asset and liability balances during the three month period ended August 2, 2025 were not materially impacted by factors other than billings, cash collections, and timing of revenue recognition.

Changes in the contract asset and liability balances during the three and six month periods ended November 1, 2025 were not materially impacted by factors other than billings, cash collections, and timing of revenue recognition.

For the Company’s contracts, there are no significant gaps between the receipt of payment and the transfer of the associated goods and services to the customer for material amounts of consideration.

Revenue recognized for the three month period ended August 2, 2025 that was included in customer advances balances as of April 30, 2025 was $ 11,358,000 .

Revenue recognized for the three month period ended July 27, 2024 that was included in customer advances balances as of April 30, 2024 was $ 5,486,000 .

Revenue recognized for the three and six month periods ended November 1, 2025 that was included in customer advances balances as of April 30, 2025 was $ 305,000 and $ 11,663,000 , respectively.

Revenue recognized for the three and six month periods ended October 26, 2024 that was included in customer advances balances as of April 30, 2024 was $ 2,475,000 and $ 7,961,000 , respectively.

The Company’s investments are accounted for as available-for-sale and are reported at fair value.

1 unchanged sentence

Gains and losses realized on the disposition of investment securities are determined on the specific identification basis and credited or charged to income.

Investments in equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other expense, net.

Investments in equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other income (expense), net.

Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date.

9 unchanged sentences

The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at estimated full year rates unless collectability is not reasonably assured.

At August 2, 2025 and April 30, 2025, the Company had no reserve for incurred cost claim audits.

At November 1, 2025 and April 30, 2025, the Company had no reserve for incurred cost claim audits.

(Loss) Earnings Per Share

2 unchanged sentences

Three Months Ended

August 2, 2025

July 27, 2024

Six Months Ended

November 1, 2025

October 26, 2024

November 1, 2025

October 26, 2024

Net (loss) income

3 unchanged sentences

Denominator for diluted (loss) earnings per share

Due to the net loss for the three months ended August 2 , 2025, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 168,254 for the three months ended August 2 , 2025.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 72 for the three months ended July 27, 2024.

Due to the net loss for the three and six months ended November 1, 2025, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 318,440 and 336,009 for the three and six months ended November 1 , 2025, respectively.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 83 and 180 for the three and six months ended October 26, 2024, respectively.

Recently Issued Accounting Standards

11 unchanged sentences

Investments consist of the following (in thousands):

Short-term investments:

Available-for-sale securities:

government securities

Corporate securities

Total short-term investments

Long-term investments:

Available-for-sale securities:

government securities

Equity securities and warrants

4 unchanged sentences

Total long-term investments

Available-For-Sale Securities

As of November 1, 2025, the balance of available-for-sale securities consisted of U.S.

government securities and high-grade corporate bonds.

Interest earned from these investments is recorded in interest income (expense), net.

gains on sales of these investments on the basis of specific identification are recorded in interest income (expense), net.

As of April 30, 2025, the company held no available-for-sale securities.

The following table is a summary of the activity related to the available-for-sale investments recorded in short-term and long-term investments as of November 1, 2025 (in thousands):

November 1, 2025

Corporate securities

government securities

Total available-for-sale securities

Equity Securities

Equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other expense, net.

Equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other income (expense), net.

Unrealized gain (loss) recorded (in thousands):

1 unchanged sentence

Three Months Ended

August 2, 2025

July 27, 2024

Six Months Ended

November 1, 2025

October 26, 2024

November 1, 2025

October 26, 2024

Net gain (loss) recognized during the period on equity securities

7 unchanged sentences

● Level 3—Inputs to the valuation that are unobservable inputs for the asset or liability.

The Company’s financial assets measured at fair value on a recurring basis at August 2 , 2025 , were as follows (in thousands):

The Company’s financial assets measured at fair value on a recurring basis at November 1 , 2025 , were as follows (in thousands):

Fair Value Measurement Using

3 unchanged sentences

Equity securities

The Company had no financial liabilities measured at fair value on a recurring basis at August 2 , 2025 .

The Company had no financial liabilities measured at fair value on a recurring basis at November 1 , 2025 .

The Company’s financial assets measured at fair value on a recurring basis at April 30, 2025, were as follows (in thousands):

19 unchanged sentences

In July 2019, the Company made its initial capital contribution to a limited partnership fund focusing on highly relevant technologies and start-up companies serving defense and industrial markets.

Under the terms of the limited partnership agreement, the Company contributed a total of $ 10,000,000 during the fiscal years ended April 30, 2021 and 2022, and there were no further contribution commitments to this fund as of April 30, 2022.

Under the terms of the limited partnership

agreement, the Company contributed a total of $ 10,000,000 during the fiscal years ended April 30, 2021 and 2022, and there were no further contribution commitments to this fund as of April 30, 2022.

In March 2022, the Company entered into a limited partnership agreement with a second limited partnership fund also focusing on highly relevant technologies and start-up companies serving defense and industrial markets.

1 unchanged sentence

During the fiscal years ended April 30, 2025, 2024 and 2023, the Company made total contributions of $ 5,674,000 , $ 3,074,000 , and $ 5,778,000 respectively.

During the three months ended August 2, 2025, the Company made no contributions.

During the six months ended November 1, 2025, the Company made contributions of $ 2,123,000 .

Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 3,351,000 to the fund, which are expected to be made over the next two fiscal years.

The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have significant influence when it holds more than a minor interest.

For the three months ended August 2 , 2025 and July 27, 2024 , the Company recorded its ownership percentage of the net gain of equity method investments, of $ 1,787,000 and $ 65,000 , respectively, in equity method investment income, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

At August 2 , 2025 and April 30, 2025, the carrying value of the equity method investments of $ 32,362,000 and $ 30,423,000 , respectively, was recorded in long-term investments on the unaudited condensed consolidated balance sheet.

For the three and six months ended November 1 , 2025 , the Company recorded its ownership percentage of the net gain of equity method investments, of $ 1,196,000 and $ 2,983,000 , respectively, in equity method investment income, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

For the three and six months ended October 26, 2024, the Company recorded its ownership percentage of the net gains of the limited partnerships, or $ 1,001,000 and $ 1,066,000 , respectively, in equity method investment income (loss), net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

At November 1 , 2025 and April 30, 2025, the carrying value of the equity method investments of $ 35,687,000 and $ 30,423,000 , respectively, was recorded in long-term investments on the unaudited condensed consolidated balance sheet.

Warranty Reserves

2 unchanged sentences

The related expense is included in cost of sales.

Warranty reserve activity is summarized as follows for the three months ended August 2 , 2025 and July 27, 2024 , respectively (in thousands):

Warranty reserve activity is summarized as follows for the three and six months ended November 1 , 2025 and October 26, 2024 , respectively (in thousands):

Three Months Ended

Six Months Ended

Beginning balance

14 unchanged sentences

Refer to Note 17—Business Acquisitions for further details.

The weighted average amortization period as of August 2 , 2025 and April 30, 2025 was seven and three years , respectively.

Amortization expense for the three months ended August 2 , 2025 and July 27, 2024 was $ 58,161,000 and $ 4,774,000 , respectively.

The weighted average amortization period as of November 1 , 2025 and April 30, 2025 was six and three years , respectively.

Amortization expense for the three and six months ended November 1 , 2025 was $ 44,462,000 and $ 102,423,000 , respectively.

Amortization expense for the three and six months ended October 26, 2024 was $ 4,795,000 and $ 9,569,000 , respectively.

Estimated remaining amortization expense for the next five years is as follows (in thousands):

4 unchanged sentences

Accumulated impairment losses

Balance at August 2, 2025

Balance at November 1, 2025

The AxS segment includes goodwill from the acquisitions of Pulse Aerospace, LLC (“Pulse”), Arcturus UAV, Inc.

8 unchanged sentences

(“Citibank”) (the “Third Amendment to Credit Agreement”).

The Third Amendment to Credit Agreement provided for an aggregate $ 200,000,000 revolving credit facility (the “Revolving Facility”), including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Company’s domestic subsidiaries (the “Guarantors”), and extends the maturity date for obligations pursuant to the Credit Agreement to October 4, 2029.

The Third Amendment to Credit Agreement provided for an aggregate $ 200,000,000 revolving credit facility (the “Revolving Facility”), including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Company’s domestic subsidiaries (the “Guarantors”), and extended the maturity date for obligations pursuant to the Credit Agreement to October 4, 2029.

Upon effectiveness of the Third Amendment to Credit Agreement, the Company drew $ 15,000,000 from the amended Revolving Facility and repaid in full all outstanding amounts owed pursuant to the prior Term Loan Facility.

4 unchanged sentences

(“Citizens”) and Royal Bank of Canada (“RBC”) (the “Fourth Amendment to Credit Agreement” and the existing Credit Agreement as amended thereby, the “Amended Credit Agreement”).

$ 350,000,000 revolving credit facility, including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Guarantors, maintains the maturity date for obligations pursuant to the prior Amended Credit Agreement to October 4, 2029.

The Amended Credit Agreement now provides for an aggregate $ 700,000,000 term loan (the “Term Loan Facility” and, together with the Revolving Facility, the “Credit Facilities”) and an aggregate $ 350,000,000 revolving credit facility, including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Guarantors, maintains the maturity date for obligations of October 4, 2029, as extended by the Third Amendment to Credit Agreement.

Upon effectiveness of the Amended Credit Agreement, the Company drew $ 225,000,000 from the amended Revolving Facility and the full $ 700,000,000 of the Term Loan Facility.

4 unchanged sentences

Pursuant to the Fourth Amendment to Credit Agreement, the Company is subject to two financial maintenance covenants which require that (i) the Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement) not exceed 3.50 to 1.00 as of the end of any fiscal quarter, for the four fiscal quarters following consummation of the BlueHalo acquisition, and thereafter 3.00 to 1.00 as of the end of any fiscal quarter, and (ii) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

The Company’s ability to borrow under the Revolving Facility is reduced by outstanding letters of credit, which as of August 2, 2025 and April 30, 2025 was $ 11,912,000 and $ 9,376,000 , respectively.

As of August 2, 2025, approximately $ 338,088,000 was available under the Revolving Facility.

The Company’s ability to borrow under the Revolving Facility is reduced by outstanding letters of credit, which as of November 1, 2025 and April 30, 2025 was $ 11,737,000 and $ 9,376,000 , respectively.

As of November 1, 2025, approximately $ 338,263,000 was available under the Revolving Facility.

Borrowings under the Revolving Facility may be used for working capital and other general corporate purposes, including acquisitions that meet certain parameters.

As of August 2, 2025, the Company was in compliance with all amended covenants.

As of November 1, 2025, the Company was in compliance with all amended covenants.

In July 2025, the Company used the proceeds from the issuance of common stock and the Company’s 0 % Convertible Senior Notes due 2030 (the “Notes”) to fully repay the Term A Loan and outstanding Revolving Facility balance.

12 unchanged sentences

Current period interest rate

Future contractual long-term debt principal payments at August 2, 2025 were as follows:

Future contractual long-term debt principal payments at November 1, 2025 were as follows:

(In thousands)

Convertible Notes

In addition, pursuant to the Note Underwriting Agreement, the Company granted the Note Underwriters an option, which was exercisable within 30 days after entering the Note Underwriting Agreement, to purchase up to an additional $ 97,500,000 aggregate principal amount of Notes solely to cover over-allotments.

In July 2025, the Company entered into an underwriting agreement (the “Note Underwriting Agreement”) with certain underwriters (the “Note Underwriters”) agreeing, subject to customary conditions, to issue and sell $ 650,000,000 aggregate principal amount of the Notes to the Note Underwriters as well as an option, exercisable within 30 days after entering the Note Underwriting Agreement, to purchase up to an additional $ 97,500,000 aggregate principal amount of Notes solely to cover over-allotments.

The Note Underwriters exercised such option to purchase an additional $ 97,500,000 aggregate principal amount of Notes.

14 unchanged sentences

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after July 21, 2028 and on or before the 61st scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the

trading day immediately before the date the Company sends the related redemption notice;

and (ii) the trading day immediately before the date the Company sends such notice.

12 unchanged sentences

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest, if any, on all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest, if any, on, all of the Notes then outstanding to become due and payable immediately.

the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest, if any, on, all of the Notes then outstanding to become due and payable immediately.

However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 365 days, at a rate per annum equal to 0.25 % of the principal amount of the Notes for the first 180 days on which special interest accrues and, thereafter, at a rate per annum equal to 0.50 % of the principal amount thereof.

The components of lease costs recorded in cost of sales and selling, general and administrative (“SG&A”) expense were as follows (in thousands):

Three Months Ended

Six Months Ended

Operating lease cost

4 unchanged sentences

Supplemental lease information was as follows:

Three Months Ended

Six Months Ended

(In thousands)

4 unchanged sentences

Weighted average discount rate

Maturities of operating lease liabilities as of August 2, 2025 were as follows (in thousands):

Maturities of operating lease liabilities as of November 1, 2025 were as follows (in thousands):

Total lease payments

3 unchanged sentences

The components of accumulated other comprehensive loss and adjustments are as follows (in thousands):

Three Months Ended

Six Months Ended

Balance as of April 30, 2025 and April 30, 2024, respectively

Change in foreign currency translation adjustments

Balance as of August 2, 2025 and July 27, 2024, respectively

Unrealized available-for-sale security losses

Balance as of November 1, 2025 and October 26, 2024, respectively

Customer-Funded Research & Development

2 unchanged sentences

Revenue from customer-funded R&D contracts is recognized in accordance with ASC 606 over time as costs are incurred.

Revenue from customer-funded R&D was approximately $ 60,847,000 for the three months ended August 2 , 2025 .

Revenue from customer-funded R&D was approximately $ 18,559,000 for the three months ended July 27, 2024.

Revenue from customer-funded R&D was approximately $ 58,304,000 and $ 119,151,000 for the three and six months ended November 1 , 2025 .

Revenue from customer-funded R&D was approximately $ 20,280,000 and $ 38,839,000 for the three and six months ended October 26, 2024.

Long-Term Incentive Awards

3 unchanged sentences

At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric.

Threshold achievement levels for which the PRSUs would vest at 50 % for each such

metric and maximum achievement levels for which such awards would vest at 250 % for each such metric were also established.

Threshold achievement levels for which the PRSUs would vest at 50 % for each such metric and maximum achievement levels for which such awards would vest at 250 % for each such metric were also established.

The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and non-GAAP adjusted EBITDA targets for the performance period.

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three months ended August 2 , 2025 and July 27, 2024 , the Company recorded $ 809,000 of compensation expense and no compensation expense related to the Fiscal 2026 LTIP, respectively.

At August 2 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2026 LTIP is $ 33,249,000 .

For the three and six months ended November 1 , 2025 the Company recorded $ 2,205,000 and $ 3,014,000 o f compensation expense related to the Fiscal 2026 LTIP, respectively.

The Company recorded no compensation expense to the Fiscal 2026 LTIP for the three and six months ended October 26, 2024, respectively.

At November 1 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2026 LTIP is $ 31,160,000 .

During the three months ended July 27, 2024, the Company granted awards under its 2021 Plan to key employees (“Fiscal 2025 LTIP”).

5 unchanged sentences

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three months ended August 2 , 2025 and July 27 , 2024, the Company recorded $ 3,859,000 and $ 306,000 and of compensation expense related to the Fiscal 2025 LTIP.

At August 2 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2025 LTIP is $ 18,288,000 .

For the three and six months ended November 1 , 2025, the Company recorded $ 1,225,000 and $ 5,084,000 of compensation expense related to the Fiscal 2025 LTIP.

For the three and six months ended October 26, 2024, the Company recorded $ 968,000 and $ 1,274,000 of compensation expense related to the Fiscal 2025 LTIP.

At November 1 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2025 LTIP is $ 17,463,000 .

During the three months ended July 29, 2023, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2024 LTIP”).

5 unchanged sentences

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three months ended August 2, 2025 and July 27, 2024 the Company recorded $ 3,008,000 and $ 1,112,000 of compensation expense related to the Fiscal 2024 LTIP, respectively.

At August 2 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP is $ 14,942,000 .

For the three and six months ended November 1 , 2025, the Company recorded $ 876,000 and $ 3,884,000 of compensation expense related to the Fiscal 2024 LTIP.

For the three and six months ended October 26, 2024, the Company recorded $ 1,078,000 and $ 2,190,000 of compensation expense related to the Fiscal 2024 LTIP.

At November 1 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP is $ 14,454,000 .

During the three months ended July 30, 2022, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2023 LTIP”).

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During the three months ended August 2 , 2025 , the Company issued a total of 61,605 fully-vested shares of the Company’s common stock to settle the PRSUs in the Fiscal 2023 LTIP.

For the three months ended August 2, 2025 and July 27, 2024, the Company recorded no compensation expense and $ 865,000 of compensation expense related to the Fiscal 2023 LTIP, respectively.

For the three and six months ended November 1, 2025 the Company recorded no compensation expense related to the Fiscal 2023 LTIP.

For the three and six months ended October 26, 2024, the Company recorded $ 801,000 , and $ 1,666,000 of compensation expense related to the Fiscal 2023 LTIP, respectively.

At each reporting period, the Company reassesses the probability of achieving the performance targets for the PRSUs.

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No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited.

For the three months ended August 2 , 2025 , the Company recorded an income tax benefit of $( 15,169,000 ) yielding an effective tax rate of 18.0 %.

For the three months ended July 27, 2024, the Company recorded an income tax expense provision of $ 1,485,000 yielding an effective tax rate of 6.6 %.

The variance from statutory rates for the three months ended August 2 , 2025 was primarily due to the loss before income taxes for the three months ended August 2, 2025.

The variance from statutory rates for the three months ended July 27, 2024 was primarily due to foreign-derived intangible income (“FDII”) deductions, federal R&D credits and excess tax benefits from the exercise of stock options and vesting of equity awards.

For the three and six months ended November 1 , 2025 , the Company recorded an income tax benefit of $( 2,305,000 ) and $( 17,474,000 ) yielding an effective tax rate of ( 11.2 )% and ( 16.7 %), respectively.

For the three and six months ended October 26, 2024, the Company recorded an income tax benefit of $( 221,000 ) and a provision for income taxes of $ 1,264,000 yielding an effective tax rate of ( 3.5 )% and 4.4 %, respectively.

The variance from statutory rates for the three and six months ended November 1 , 2025 was primarily due to the loss before income taxes for the three months ended November 1, 2025.

The variance from statutory rates for the three and six months ended October 26, 2024 was primarily due to foreign-derived intangible income (“FDII”) deductions, federal R&D credits and excess tax benefits from the exercise of stock options and vesting of equity awards.

On July 4, 2025, the reconciliation bill, commonly known as the One Big Beautiful Bill Act (“OBBBA”), was enacted into law.

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As the OBBBA was enacted during the Company’s fiscal quarter ended August 2, 2025, the Company reflected the impacts of the OBBBA on the condensed consolidated financial statements.

The Company is in the process of evaluating the financial statement impact of these provisions to future periods.

The Company is in the process of evaluating the financial statement impact of these provisions in future periods.

Each of these changes may result in accelerated tax deductions during the current and future tax years.

Cash tax payments for the fiscal year ending April 30, 2026 are expected to be significantly reduced as a result of the accelerated tax deductions.

Cash tax payments for the fiscal year ending April 30, 2026 are expected to be significantly reduced as a result

of the accelerated tax deductions.

However, the Company's total income tax expense and effective tax rate are not expected to materially change as a result of the new legislation.

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BlueHalo Acquisition

On May 1, 2025, the Company closed its acquisition of BlueHalo LLC for merger consideration, net of cash acquired, of $ 3,484,945,000 .

On May 1, 2025, the Company closed its acquisition of BlueHalo for merger consideration, net of cash acquired, of $ 3,484,945,000 .

Through the acquisition, BlueHalo is incorporated into the Company’s AxS and SCDE segments.

The acquisition will help to advance the combined company as a global defense technology leader across air, land, sea, space, and cyber.

The Company believes that the acquisition will help to advance the combined company as a global defense technology leader across air, land, sea, space, and cyber.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

(in thousands)

Merger consideration transferred

Equity consideration transferred

Settlement of BlueHalo’s transaction expenses

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The allocation of the purchase price is preliminary and subject to change as the Company continues to evaluate the fair values of certain assets and liabilities acquired.

Open items in the purchase price allocation include the valuation of assets acquired and liabilities assumed including, but not limited to technology, backlog and customer relationships intangibles and fair value adjustment to inventory;

property, plant and equipment;

Open items in the purchase price allocation include the valuation of assets acquired and liabilities assumed including, but not limited to technology, backlog and customer relationships intangibles;

fair value adjustment to inventory, property, plant and equipment;

details surrounding tax matters;

and assumptions underlying certain existing or potential reserves, such as those for inventory and legal matters (in thousands):

and assumptions underlying certain existing or potential reserves, such as those for inventory and legal matters.

During the three months ended November 1, 2025, the Company recorded adjustments related to the preliminary allocation of the purchase price including a revision to the fair value of technology, backlog and customer relationships intangibles;

fair value adjustment to inventory;

and deferred tax liability resulting in a net increase to goodwill of $ 81,321,000 .

These adjustments resulted in a reduction of amortization expense of $ 4,956,000 related to the three months ended August 2, 2025 (in thousands):

Fair value of assets acquired:

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BlueHalo Supplemental Pro Forma Information (unaudited)

BlueHalo revenue and loss from operations for the three months ended August 2, 2025 since its acquisition on May 1, 2025 was $ 235,282,000 and $( 49,451,000 ), respectively.

The pro forma results for the first quarter ended August 2, 2025 were prepared as if the acquisition was completed on the first day of the Company's fiscal year May 1, 2024.

BlueHalo revenue and loss from operations for the six months ended November 1, 2025 since its acquisition on May 1, 2025 was $ 480,337,000 and $( 129,411,000 ), inclusive of $ 120,428,000 of intangible amortization, respectively.

The following unaudited pro forma summary presents condensed consolidated information of the Company as if the business acquisition had occurred as if the acquisition was completed on the first day of the Company's fiscal year May 1, 2024.

The pro forma amounts include the historical operating results of the Company and BlueHalo prior to the acquisition.

1 unchanged sentence

Three Months Ended

Six Months Ended

Net loss attributable to AeroVironment, Inc.

The Company recognized a nonrecurring pro forma adjustment to pro forma earnings to amortize an increase in the fair value of inventory acquired during the three months ended August 2, 2025.

In addition, for the three months ended August 2, 2025, the amortization expense associated with the Company's one-year intangible backlog has been eliminated within the pro forma adjustments.

The Company recognized a nonrecurring pro forma adjustment to pro forma earnings to amortize an increase in the fair value of inventory acquired during the three and six months ended November 1, 2025.

In addition, for the three and six months ended November 1, 2025, the amortization expense associated with the Company's one-year intangible backlog has been eliminated within the pro forma adjustments.

These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 27, 2024, reflecting the additional amortization and depreciation that would have been charged, incremental interest expense associated with the initial financing for the acquisition under the term loan and revolver, and including the results of BlueHalo prior to acquisition.

The Company incurred approximately $ 49,178,000 of BlueHalo acquisition-related expenses.

The Company recognized a nonrecurring pro forma adjustment to the three months ended August 2, 2025 to remove the impact of the transaction costs from the historical balance, while recognizing the $ 43,020,000 of transaction expenses within the three months ended July 27, 2024 to reflect the costs as if the acquisition was completed during the three months ended July 27, 2024.

The Company recognized a nonrecurring pro forma adjustment to the three and six months ended November 1, 2025 to remove the impact of the transaction costs from the historical balance, while recognizing the $ 49,178,000 of transaction expenses within the three months ended July 27, 2024 to reflect the costs as if the acquisition was completed during the three months ended July 27, 2024.

The unaudited pro forma combined financial information presented above does not give effect to the July 2025 common stock issuance and Notes issuance, as such proceeds were not used to fund the BlueHalo acquisition.

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Funded status of the plan

The projected benefit obligation includes assumptions of a discount rate of 3.6 % and pension increase for in-payment benefits of 2.5 % for both August 2 , 2025 and April 30, 2025.

The projected benefit obligation includes assumptions of a discount rate of 3.6 % and pension increase for in-payment benefits of 2.5 % for both November 1 , 2025 and April 30, 2025.

The accumulated benefit obligation is approximately equal to the Company’s projected benefit obligation.

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Three Months Ended

Six Months Ended

Expected return on plan assets

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Prior period segment information has been revised to align with the new segment measure of profitability.

Three Months Ended August 2, 2025

Three Months Ended November 1, 2025

Product sales

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Intangible amortization included in cost of sales

Sales and marketing

General and administrative less intangible amortization

SG&A less intangible amortization

Intangible amortization included in SG&A

5 unchanged sentences

Segment adjusted EBITDA

Three Months Ended July 27, 2024

Three Months Ended October 26, 2024

Product sales

2 unchanged sentences

Intangible amortization included in cost of sales

Sales and marketing

General and administrative less intangible amortization

SG&A less intangible amortization

Intangible amortization included in SG&A

5 unchanged sentences

Segment adjusted EBITDA

Six Months Ended November 1, 2025

Product sales

Contract services

Cost of sales less intangible amortization and other purchase accounting adjustments

Intangible amortization included in cost of sales

SG&A less intangible amortization

Intangible amortization included in SG&A

Research and development

Acquisition-related expenses

Amortization of cloud computing arrangement implementation

Other income (expense)

Stock-based compensation

Segment adjusted EBITDA

Six Months Ended October 26, 2024

Product sales

Contract services

Cost of sales less intangible amortization and other purchase accounting adjustments

Intangible amortization included in cost of sales

SG&A less intangible amortization

Intangible amortization included in SG&A

Research and development

Acquisition-related expenses

Amortization of cloud computing arrangement implementation

Other income (expense)

Stock-based compensation

Segment adjusted EBITDA

The following table (in thousands) provides a reconciliation from segment adjusted EBITDA to income before income taxes:

1 unchanged sentence

Three Months Ended

Six Months Ended

Segment adjusted EBITDA

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Corporate assets primarily consist of cash and cash equivalents, prepaid expenses and other current assets, long-term investments, property and equipment, net, operating lease right-of-use assets, deferred income taxes and other assets managed centrally on behalf of the business segments.

As of August 2, 2025

As of November 1, 2025

As of April 30, 2025

Capital expenditures are summarized in the table below (in thousands):

Three Months Ended August 2, 2025

Three Months Ended July 27, 2024

Six Months Ended November 1, 2025

Six Months Ended October 26, 2024

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements