AeroVironment’s QQ2 2026 quarter delivered a milestone-filled performance despite a challenging macro environment driven by a government shutdown and transitional ERP systems. Management highlighted a record total contract value (TCV) of $3.5 billion and second-quarter bookings near $1.4 billion, underscoring a robust demand backdrop across Air, Land, Sea, Space and Cyber domains. Revenue for the quarter was $472.5 million, up 151% year over year on reported terms and 9% on a pro forma basis, with legacy AV organic growth of 21% in the quarter. Although GAAP gross margins were pressured (adjusted gross margin at 27% versus 41% a year ago) due to a higher service mix, product mix changes, the Oracle ERP go-live, and the impact of the government shutdown, management guided to improving the margin profile into the back half of FY26, targeting high-30% adjusted gross margins by Q4 and an annual adjusted gross margin in the low 30s. The company reiterated FY26 guidance: Revenue of $1.95–$2.0 billion, Adjusted EBITDA of $300–$320 million, and Non-GAAP EPS of $3.40–$3.55, with 93% visibility to the midpoint of revenue. AV’s strategic consolidation with BlueHalo produced meaningful synergies and positioned the group as a “next-generation defense technology” platform spanning unmanned systems, Counter-UAS, space, directed energy, cyber and software ecosystems (AV_Halo). The back-half revenue ramp is expected to be driven by a mix shift toward more product revenue (e.g., BADGER, LOCUST, Switchblade, JUMP20 family) and higher funded task orders as government funding flows resume. This dynamic, combined with expanding domestic manufacturing capacity (Salt Lake City facility) and a growing international footprint, supports a constructive long-term growth thesis, albeit with near-term execution risks tied to funding timing and integration costs.