AeroVironment (AVAV) delivered a commercially meaningful QQ2 2026 with a record level of new contract awards and bookings, underscoring the company’s transition into a scalable, multi-domain defense provider. In the quarter, AVAV reported revenue of approximately $472.5 million (reported as $472.5M in the press and $473M in the call), driven by strong activity in the AxS (precision strike and counter-UAS) and Space/Cyber/Directed Energy segments, despite a government shutdown that introduced timing headwinds. Total awards ceiling reached $3.5 billion, with bookings of about $1.4 billion, and funded backlog of $1.1 billion alongside unfunded backlog of $2.8 billion, implying substantial future revenue visibility (about 93% of the midpoint of FY26 guidance). The company reaffirmed and elevated its FY26 revenue guidance to a range of $1.95–$2.00 billion, with adjusted EBITDA guidance of $300–$320 million and non-GAAP EPS guidance of $3.40–$3.55. Management stressed capacity expansion, including Salt Lake City manufacturing capacity for Switchblade, and highlighted BlueHalo integration as a growth accelerator. On the margin front, adjusted gross margin declined meaningfully to 27% in Q2 (vs. 41% a year ago) due to a higher services mix, early-stage maturation of several products, and one-time ERP go-live costs; management expects improved margins in Q3 and high-30s in Q4 as product revenue ramps and mix shifts toward higher-margin product sales. The call emphasized long-duration, high-value program wins (e.g., U.S. Army LRR P550 win ~$1B, 874M Army IDIQ for Raven/Puma/JUMP assets, and large long-haul laser/space contracts) and international expansion with select partnerships (Taiwan NCSIST, Korean Air) and new manufacturing capacity designed to scale to >$2B of Switchblade output. The investment thesis rests on AVAV’s multi-domain software ecosystem (AV Halo), open-architecture approach, aggressive R&D-led product cadence, and a resilient manufacturing footprint, balanced against near-term gross-margin pressure and funding timing risk from the federal budget cycle.