AeroVironment (NASDAQ: AVAV) closed its fiscal year with a Q4 that was hard to miss. Revenue hit $641.6 million, more than double the $275.1 million from a year ago and 15% above the $556 million consensus. Non-GAAP diluted EPS of $1.84 cleared the $1.46 estimate by 26%. The headline numbers reflect a company transformed by the BlueHalo acquisition, which closed in May 2025 and contributed $282.3 million to Q4 revenue alone.
Then you look forward. FY27 guidance calls for revenue of $2.125 billion to $2.225 billion, implying roughly 10% growth at the midpoint from FY26's $1.98 billion. That is a dramatic deceleration from the 141% top-line surge the company just reported. More telling is the GAAP EPS guidance range of $0.16 to $0.48, a sliver of the $1.25 GAAP print in Q4 alone. Non-GAAP EPS of $3.02 to $3.34 is actually below the $3.31 the company delivered in FY26.
The gap between GAAP and non-GAAP is the real story here, and it is not getting smaller. Q4 gross margin fell to 32% from 36% a year ago, driven by $18.4 million in intangible amortization from acquisitions and a shift toward lower-margin service revenue from BlueHalo. Adjusted gross margin, which strips out amortization, tells a different tale: product margins hit 44% in Q4, up from 36% in Q3, while service margins cratered to 2% from 17%. The mix is moving toward products, but the accounting charges are piling up. Total intangible amortization for FY26 was $223.1 million, up from $40.1 million in FY25. For FY27, the company expects another $173 million in amortization.
Management is signaling caution with the guidance. Revenue at the midpoint of $2.175 billion would represent a 10% increase, but the implied non-GAAP EPS midpoint of $3.18 is 4% below FY26's $3.31. That is unusual for a company coming off a year of record bookings ($2.7 billion) and a book-to-bill of 1.4. Funded backlog hit $1.2 billion, up 65% year over year, providing strong near-term visibility. Yet the guidance suggests that converting that backlog into profitable revenue is getting more expensive, not less.
The Autonomous Systems (AxS) segment remains the engine. AxS revenue of $492.4 million in Q4 was up 79% from the prior-year period, driven by Precision Strike & Defensive Systems, which nearly doubled to $333 million. The Space, Cyber and Directed Energy (SCDE) segment contributed $149.2 million, down 8% from pro forma Q4 FY25, as Cyber & Mission Solutions revenue fell 26%. The SCDE segment adjusted EBITDA was just $1.4 million, a razor-thin margin that underscores the drag from integration costs and lower-margin contracts.
Capital allocation is shifting. The company raised $968.5 million in equity and $726.9 million in convertible debt during FY26 to fund the BlueHalo acquisition and other investments. Cash and short-term investments ballooned to $632.3 million from $40.9 million a year ago. But long-term debt also rose to $729 million from $30 million. The balance sheet is now leveraged in a way it was not before. Interest expense, net, swung to a $3.4 million gain in Q4 from a $1 million loss a year ago, but the full-year picture shows $5.6 million in net interest expense. The FY27 guidance assumes $8 million in net interest income, suggesting the company expects to deploy its cash pile productively.
The FY27 guidance implies a company in transition. Revenue growth is decelerating, GAAP profitability is being compressed by acquisition accounting, and the non-GAAP EPS guidance suggests margins are not expanding fast enough to offset the amortization wall. The $1.2 billion funded backlog provides a cushion, but the SCAR termination removed $1.5 billion in unfunded backlog from the reported figures, a reminder that government contract visibility can vanish quickly. Investors should watch whether the AxS segment can sustain its margin momentum and whether SCDE turns profitable enough to justify the acquisition price. The Q4 beat was real. The FY27 guide is a reality check.